EPA approves year-round E15, but negated by refinery waivers
FARGO, N.D. -- The ethanol industry claimed a victory on May 31 with the Environmental Protection Agency's approval of year-round E15. Just one day before the start of the summer driving season, the agency waived the Reid Vapor Pressure rule to a...
FARGO, N.D. - The ethanol industry claimed a victory on May 31 with the Environmental Protection Agency's approval of year-round E15.
Just one day before the start of the summer driving season, the agency waived the Reid Vapor Pressure rule to allow sales of E15 from June 1 to Sept. 30.
However, in the same breath, ethanol officials warned that EPA continuing to grant small refinery waivers negated any of the gains from E15 and undermined the Renewable Fuels Standard.
The waivers mean refineries won't have to meet requirements for blending renewable fuels into their gasoline or diesel fuel. Refineries also can get around the renewable fuels requirements by acquiring credits known as RINs, short for Renewable Identification Numbers.
Minnesota Sen. Amy Klobuchar held a listening session with farmers in Fargo on June 6 to discuss renewable fuels, E15 and the ongoing frustration with EPA on the waivers. She says Senate Majority Leader Mitch McConnell of Kentucky should force hearings to get to the bottom of the waiver issue. "And basically, you could pass a law changing it, but right now people seem to be continuing to let companies like Chevron and Exxon get waivers, and it makes no sense at all," she says.
Klobuchar says the waivers were an emergency measure put in place for small refineries and usually six or so were granted per year. "And now its turned into dozens and dozens of them and they're being done behind closed doors," she says. The result was that in 2018, nearly 2.6 billion gallons of ethanol was stripped out of the Renewable Fuels Standard and was never reallocated by EPA.
Klobuchar, a Democrat, says she and Sen. Chuck Grassley, R-Iowa, have been working in a bipartisan fashion to fix the waiver problem.
"We're pushing, but they've just got to stop because we have enough problems for rural America," she says. "They do not have to grant those waivers to big oil companies, but that's what they've been doing."
Grassley says he's asked EPA officials repeatedly about why they continue to grant the large number of refinery waivers and refuse to reallocate the lost gallons, but has received an unsatisfactory answer. "I assume that they (EPA) are saying that the law doesn't allow it (reallocation), but I don't know if I've actually heard those words from them, but you get that they can't do it," he says.
Grassley says he is growing increasingly irritated with EPA's refusal to reallocate the gallons because it is undercutting the Renewable Fuels Standard. "These waivers have been given willy nilly."
Grassley said he thinks new EPA administrator Andrew Wheeler is going to have a different approach.
"I hope six months from now you can't tell me that I judged him wrong. I'm not saying he's not going to give any waivers but he seems to indicate to me that we have to be more careful about how we do it," he says.
Grassley adds that continuing to grant the waivers doesn't make sense. "Because 18 months ago, RIN certificates were at 80-cents and it was a hardship, but now these RINs are down to 20-cents or below. So, what is the problem now?"
Grassley says he suspects Wheeler would tell him there are two circuit court rulings that dictate EPA must grant the waivers, but the senator would rather Wheeler not grant them and allow the agency to be sued.
The reason for the waivers and the long-fought battle to get year-round E15 lies in the strength of the petroleum industry lobby on Capitol Hill.
Jeff Broin is chairman and president of Sioux Falls, S.D.-based biofuels company POET. "The oil industry doesn't want to give up market share and they are well entrenched politically in Washington, so it's been an uphill battle," Broin says. "We have fought numerous battles to get to this point."
Broin continues to be positive about the E15 decision and called it a historic moment for agriculture.
"The rule opens up 7 billion gallons of annual ethanol demand that we hope to get to in the next several years and another 2 billion bushels of annual corn demand," he says.
American Coalition for Ethanol CEO Brian Jennings says while they too were pleased with the E15 decision, he says EPA is still abusing the RFS law. "And the net effect of E15 year-round and 2.61 billion gallons worth of demand destruction through refinery waivers means farmers are still in the hole," he says.