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Opinion

Plug the Leak in America’s Biofuel Targets

It’s been a tough year for rural America. Inclement weather disrupted the harvest in many areas, and trade disputes placed international shipments on hold. Our farmers need certainty and market access for their products, and history shows that homegrown biofuels such as ethanol can deliver.

In fact, the Renewable Fuel Standard has been one of our country’s great success stories. It provides motorists with more affordable choices at the pump, keeps the air clean, and drives demand for our corn farmers, who harvest the feedstock for renewable biofuel.

Each year, under the RFS, the Environmental Protection Agency is responsible for showing how it will grow America’s use of renewable biofuels. RFS targets are called renewable volume obligations, and they ensure that petroleum interests can’t squeeze out their renewable, low-carbon competition. The final 2019 RVO numbers were set last week, providing a market for 19.92 billion gallons of biofuel, including 15 billion gallons of conventional biofuels.  

Unfortunately, those numbers don’t tell the whole story. Under federal law, the EPA may provide special “economic hardship” exemptions to “small” refiners facing unique circumstances. Most importantly, however, the refiners must face “disproportionate economic hardship” in order to qualify for the exemption.

On Nov. 20, it was revealed that the previous EPA administrator, Scott Pruitt, granted one of those handouts to a familiar oil giant, Chevron Corp. In 2017, Chevron reported a net income of $9.2 billion. By any measure, it’s hard to imagine how anyone could define “small” or “disproportionate economic hardship” to include a company generating $9.2 billion in net income.

But this is only the most recent example. Over the last two years, the agency has granted dozens of exemptions under the RFS to some of the most profitable refiners in the country, destroying demand for 2.25 billion gallons of American-made ethanol.

This fall, the University of Missouri’s Food and Agricultural Policy Research Institute released a study showing that, if the EPA continues to follow recent practices on refinery exemptions, the market for U.S. corn will shrink by an additional 1.5 billion bushels between 2018 and 2023, helping drive farmers into bankruptcy and drying up businesses in rural America.

It’s important to recognize that the 2019 RVO numbers released last week hold strong promise, with a commitment to traditional biofuels and 418 million gallons of cellulosic biofuels. But the latest EPA rule is also a missed opportunity to correctly account for billions of gallons of biofuels lost to unwarranted refinery exemptions. Until these are addressed properly, we’re still taking two steps back for every step forward.

Acting EPA Administrator Andrew Wheeler has a valuable opportunity to chart a new course for biofuels and rural America. To reverse the damage done by his predecessor, Wheeler must follow the law and reallocate lost gallons, ensuring the targets set by Congress are actually met. This would give farmers the boost they need to keep the rural economy moving.  

 

Emily Skor is CEO of Growth Energy.

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