Opinion

EPA’s New Proposal to Rein in Refinery Waivers Falls Short

By Geoff Cooper
November 14, 2019 at 5:00 am ET

The Renewable Fuels Standard is an extraordinary program — that is, when it is being properly implemented.

When administered correctly, the RFS decreases reliance on imported petroleum, reduces greenhouse gas emissions, lowers gas prices and boosts rural economies. The program achieves these goals by ensuring that biofuels are afforded access to a fuel market that is otherwise closed to competition.

Unfortunately, the current administration’s approach to implementation has destabilized the RFS and created significant uncertainty in the marketplace. Specifically, the Environmental Protection Agency’s liberal granting of compliance waivers to small oil refineries has resulted in lower production and use of ethanol, increased emissions, higher consumer gas prices and lost jobs.

In recent years, the EPA has granted an unprecedented number of refinery exemptions, allowing these refineries to ignore their legal obligations to blend increased volumes of renewable fuels like ethanol. Under both previous Administrator Scott Pruitt and current Administrator Andrew Wheeler, the EPA has disregarded the established eligibility requirements for refineries to receive a waiver and ignored Department of Energy recommendations on whether exemptions are truly warranted or not.

Under the Trump administration, the EPA has granted an average of 28 exemptions per year, eroding renewable fuel blending requirements by an average of 1.35 billion gallons. That compares to just seven waivers per year, on average, and a reduction in the RFS requirements of just 230 million gallons under the previous administration.

The dramatic increase in exemptions has resulted in demand destruction and some of the worst market conditions in the industry’s history. The RFS was intended to continually grow the volume of domestic ethanol consumption. But unfortunately, the demand increase promised by the RFS has not materialized due to the exemptions. 

After 22 straight years of successive increases, U.S. ethanol demand in 2018 fell from 2017 levels. Facing weak or negative margins, ethanol plants have been forced to idle or permanently shutter. 

Since early 2018, at least 19 ethanol plants have idled or closed. When an ethanol plant goes down, the local community suffers: More than 3,500 jobs in ethanol production, farming and related industries have been affected.

Shortly after another 31 refinery exemptions were given out in August, outrage in farm country reached a fever pitch. In response, President Donald Trump promised to address the refinery waiver issue and restore integrity to the RFS. Unfortunately, a recent EPA proposal intended to implement the relief package promised by Trump  fails to correct these problems.

The bait and switch employed by the EPA in this latest proposal does not ensure that the statutory volume for conventional biofuels will be enforced in 2020 or beyond. In short, the EPA’s proposal will not bring idled plants back online or put furloughed employees back to work. The administration can — and must — do better in implementing the RFS.

The EPA will be accepting public comments on the supplemental proposal until Nov. 29. The hardworking men and women of the U.S. ethanol industry definitely will be weighing in, and we encourage any American who cares about clean air, a strong economy and lower gas prices to do the same.

 

Geoff Cooper is the president and CEO of the Renewable Fuels Association.

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