Some ethanol plants are slowly coming back online as gasoline demand grows, but Food and Drug Administration guidelines continue to make it difficult for facilities to produce alcohol for hand sanitizer, industry leaders say.
“The worst may be behind us,” Geoff Cooper, president and CEO of the Renewable Fuels Association, told reporters Friday. “We are starting to see ethanol plants come back online and seeing some incremental increases in production.”
As of Thursday, 56 out of the nation's 204 ethanol plants were running at full capacity. About 81 plants were running at a reduced rate, while 67 were fully idled (52 of those facilities have stalled since March 1). Overall plant capacity is at 53.3% representing a volume capacity of 9.2 billion gallons, according to RFA.
The number of plants running at full capacity is up slightly from 49 as of May 6, according to RFA numbers. While Cooper is glad to see more plants come back online, he said the industry has a long way to go.
RFA Chairman Neil Koehler, who is also the CEO of Pacific Ethanol, said California was hit exceptionally hard as one the first states to initiate a stay-at-home order.
“We saw demand destruction in parts of California that was closer to 70-75%,” Koehler said. “It has been coming back in that market, albeit slowly and we anticipate it to be a choppy return.”
Koehler said it will be anyone’s guess as to when the state gets back to the demand levels observed before COVID-19.
Tim Winters, president and CEO of Western New York Energy, said producers would like to see ethanol demand levels rise but the industry already faces high levels of ethanol stocks.
The record ethanol stock levels have led his company to produce hand sanitizer, but Winters argues FDA is still not being clear on regulatory specifications.
“The lack of clarity from the FDA has created such ripples in the market for sanitizers that there are people that just don’t know what they want to do,” Winters said.
Guidelines issued by FDA on March 27 said ethanol plants did not have to meet U.S. Parmacopedia and Food Chemical Codex guidelines, but the agency reversed its stance two weeks later.
Cooper, Koehler, and Winters want FDA to take Canada’s temporary approach on relaxing regulations for ethanol plants producing hand sanitizer. On Thursday, RFA sent a letter to FDA Commissioner Stephen Hahn urging the agency to follow Canada’s approach.
Cooper said RFA was happy to see that House Democrats included assistance for the industry in a $3 trillion stimulus bill introduced on May 13.
In the bill, biofuel plants would be eligible for payments of 45 cents per gallon for fuel produced from Jan. 1 to May 1. Plants that were unable to produce for a month or more, could get payments of 45 cents on half their production during the corresponding period in 2019.
Cooper said there is strong support on both sides of the aisle in the Republican-controlled Senate for getting biofuel producers some kind of direct relief.
The Department of Agriculture has launched an online portal to start accepting applications for its Higher Blends Infrastructure Incentive Program, which will award $100 million in competitive grants for expanding ethanol and biodiesel fuels. Applications must be electronically submitted by Aug. 13.