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‘This is not a done deal’

By Staff | Oct 18, 2019



The agreement announced recently between the Environmental Protection Agency and the United States Department of Agriculture that was negotiated by President Donald Trump is by no means a “done deal,” according to Monte Shaw, executive director of the Iowa Renewable Fuels Association.

The agreement on the Renewable Fuel Standard addresses issues caused by RFS refinery exemptions that have impacted biofuels demand over the past several years.

Over the past three years, the EPA has granted 85 small-refinery exemptions, waiving the requirements of those refineries to blend ethanol into petroleum-based fuels. Those 85 exemptions have led to four billion gallons of ethanol demand to be destroyed because the EPA had not reallocated the blending requirement among the remaining refineries.

According to the agreement announced last week, the EPA will take into account the number of exemptions it will grant in the future and reallocate the blending responsibilities, which is what the RFS already requires by law.

The deal hinges on a big “if,” Shaw said.

“If what we were briefed on last week and was announced is rolled out and finalized with the details being good, then I think it’s a chance to get the RFS back on track, back to being a policy that drives biofuels demand.”

The Trump Administration’s EPA granting more and more exemptions without reallocating ethanol blending requirements has had a “pretty devastating effect” on the biofuels industry in Iowa and across the country, Shaw said.

For many refineries, the exemptions have been the “final nail in the coffin,” he said.

“We’re seeing plants that have shut down,” he said. “There’s been three ethanol plants and one biodiesel plant in Iowa alone that are not running today that would be if the margins were there. When we told the President ‘Don’t do this,’ we weren’t crying wolf. Plants have shut down, people have lost their jobs. It’s been very, very painful.”

Shaw said the IRFA supports the plan and wants to see the EPA follow through with it, but likened it to applying a tourniquet to a bleeding limb.

“It doesn’t undo the four billion gallons of exemptions that are already out there,” he said. “It’s not going to be a magic switch that is flipped that puts those 20 ethanol and half dozen biodiesel plants (across the country) back into production. It’s taken them a while to get into this situation, it’s going to take a while to get out. But you’re not going to get out of it if you don’t stop the bleeding.”

Shaw said the proposal released by the White House last week was “without a ton of details from the administration,” but he expects in the next week or two that the EPA will release the detailed language of the proposal, which will then go through the EPA’s rule-making process.

“We are anxiously waiting to see if the language the EPA rolls out matches what we were told last week,” he said. “And to make sure there aren’t any unexpected provisions that would be problematic. This is not a done deal what they rolled out sounded good, it sounded like stuff that would help us and get the RFS back on track. We responded positively to that, that’s what we would like to see happen.”

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