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Ethanol Awaits Fate on Waivers, Aid
By Todd Neeley
Friday, August 7, 2020 10:25AM CDT

OMAHA (DTN) -- The ethanol industry continues to wait for a decision from EPA on 86 pending small-refinery exemptions after the U.S. Department of Energy finished a review and sent those requests back to EPA.

During a news conference on Thursday, Renewable Fuels Association President and CEO Geoff Cooper said the small-refinery exemption program needs to be transparent.

A report from Hoosier Ag Today, citing unnamed sources, said the DOE had recommended EPA approve some of the pending 58 retroactive waiver requests to the Renewable Fuel Standard. The EPA still has a total of 86 pending requests for small-refinery exemptions, including a total of 28 for 2019 and 2020.

Cooper said the agency already has missed the 90-day deadline to issue decisions on the requests. The deadline was triggered when EPA received the requests.

"We haven't heard what the DOE recommends," he said. "It would be absolutely insane for DOE to recommend any of those hardship waivers. If there was no hardship in 2012, how can they claim that now? There's no transparency in this process."

When contacted by DTN, EPA spokesperson Molly Block said, "EPA has received initial feedback from the Department of Energy on certain petitions for small-refinery exemptions for past compliance years under the Renewable Fuel Standards Program. Our staff is reviewing."

Cooper said SREs have "eroded" the RFS from 15 billion gallons to 13.7 billion or 13.8 billion in each of the past several years.

"If the EPA continues to hand out these exemptions illegally, they're locking in the E10 blend wall," Cooper said. "It really removes the incentive to expand into higher blends. We've got an industry capable of producing 17 billion gallons or more. We should use that capacity."

The blend wall is when the total amount of ethanol production exceeds what is allowed in the gasoline blend market.

The U.S. Court of Appeals for the 10th Circuit in Denver ruled in January that the EPA mishandled the SRE program when it came to issuing three refining company waivers.

It was expected the agency would apply the ruling nationally after the court said the three companies involved had not previously received waivers and didn't qualify.

"It's the statute itself that established DOE's role in the process," Cooper said. "EPA has really set up a situation that allows for finger pointing between agencies."

INDUSTRY WAITS FOR AID

In addition, like other segments of the agriculture industry, ethanol producers continue to wait for financial help from Congress.

Republicans and Democrats continue to hammer out the final details of a COVID-19 relief package to include agriculture, with a Friday deadline in place to reach an agreement.

"It does feel like a long way to go in the next 48 hours," Cooper said.

"We remain hopeful and confident something will come together in the next 48 hours," Cooper said. "The good news is there is bipartisan support. We feel quite confident that, if something comes together, it will include something for biofuels.

"The bottom line is the industry is not in good shape. It is in worse shape than it was pre-COVID. We're dealing with the loss of key export markets. We've not exported a drop of ethanol to China. But it is broader than China. The industry was already in pretty tough shape."

During the peak of the COVID-19 economic shutdown, about half of the nation's ethanol production went offline.

"We need to see continued expansion in E15 and higher blends," Cooper said. "We're not done building demand in the U.S. by any stretch."

Randy Doyal, CEO of Al-Corn Clean Fuel in Minnesota, said the industry is struggling his state with two or three plants closed and others at reduced production.

"It's laughable to me DOE could say refiners suffered a hardship and they're putting us out of business," he said. "We're hanging in there and we're not going away. We're too much like farmers."

RFS ANNIVERSARY

The 15th anniversary of the RFS being signed into law is on Saturday.

On Thursday, the RFA released a report on what the program has meant to the industry.

When the first RFS was signed into law in 2005, there were 81 ethanol plants across the country. That has grown to more than 205. Ethanol production capacity has grown from about 4 billion gallons in 2005 to about 16 billion gallons in 2020.

The RFA said the value of ethanol and co-products has grown by more than $20 billion, while growing the number of jobs in ethanol from about 150,000 in 2005 to about 350,000 in 2020.

Corn production has increased nearly 25%, while planted acreage has grown by 10% since 2005. The RFA report said overall food inflation has fallen from 2.4% in 2005 to 1.9% in 2020.

Overall crop acres in use fell from 418 million acres in 2005 to 396 million acres in 2020. Corn production in the U.S. has increased by 23% since 2005.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN


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