Somewhat negative reaction to proposed RFS volumes

The EPA releasing their proposed 2019 Renewable Fuels Volume Requirements under the RFS which calls for 15 billion gallons of Ethanol and an increase of 330 million gallons of Biodiesel.  However, the reaction from the industry has been, shall we say, underwhelming.

POET Sr. Vice President of External Affairs and Communications Kyle Gilley today responded to the release:

“Proposed biofuel volumes are meaningless when the EPA continues to hand out waivers to the largest and most profitable companies in the world. The more-than 1.6 billion gallons that have already been waived this year equal a 4 percent drop in the corn grind nationally, devastating for farmers who have faced more than four years of declining farm income and poor crop prices.

“Administrator Pruitt and the Trump Administration must stand up for farmers, immediately reallocate those lost gallons and cease bailouts to the oil industry. We are disturbed by reports that a reallocation plan was dropped due to pressure from oil interests. Refiners must be held accountable, and E15 must be available to consumers year-round. Only then will these numbers have any meaning.”

From the Iowa Renewable Fuels Association:

The draft proposal does not address the demand destruction caused by highly questionable small refinery exemptions that directly undercut the RFS levels.

“This is a status quo proposal for ethanol and the status quo is bad,” stated Iowa Renewable Fuels Association (IRFA) Executive Director Monte Shaw. “The ethanol number isn’t worth the paper it’s written on so long as Scott Pruitt is granting small refinery exemptions left and right – even beyond what the Department of Energy recommends. With Pruitt in charge of the EPA, the ethanol number in reality is more like 13.5 billion gallons, which is well below what President Trump promised and what it takes to grow demand. Rural America is already suffering from low commodity prices and tariff wars, and today’s proposal is a missed opportunity to provide good news for consumers and farmers.”

The proposal does recommend increasing advanced biofuels by 590 million gallons for 2019. Of this, cellulosic ethanol received a 93 million-gallon boost with the rest allocated to any advanced biofuel.

“It was good to see the EPA recognize that advanced biofuels are growing and can be a bigger part of the RFS,” stated Shaw. “However, there’s not much in real forward progress from where we thought we were last year. The suspect small refinery exemptions also destroy advanced biofuels demand, most often satisfied with biodiesel. So this year’s proposed increase barely offsets the biodiesel demand destruction from last year’s exemptions. Finally, despite proven technologies, the approval of new cellulosic pathways under the RFS is keeping production in check. We have several cellulosic projects at Iowa plants ready to go, but they need the green light from EPA.”

The 2020 proposed level for biodiesel was more positive. After being flatlined by the Pruitt EPA last year, this proposal calls for a 330 million-gallon increase.

“It was refreshing to see the biodiesel level bumped up,” stated Shaw. “Congress created this RFS category and intended to see it grow. It has been slow-walked or stalled for the past several years. With biodiesel as the advanced biofuel of choice, its real demand is impacted more by the total advanced number, but the biodiesel-specific level serves as a useful floor and should boost investor and producer confidence to keep growing the young industry.”



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