ACE urges EPA to immediately correct RFS implementation missteps for biofuel producers, farmers hit by COVID-19 economic fallout
Posted on 04/03/2020
Sioux Falls, SD (April 3, 2020) – Today, the American Coalition for Ethanol (ACE) CEO Brian Jennings urged the Environmental Protection Agency (EPA) to address a shortcoming in the Agency’s implementation of the Renewable Fuel Standard (RFS) which has been exposed with the recent nosedive in gasoline use as a result of COVID-19, and reminded EPA of pending actions it can take to mitigate the economic fallout for biofuel producers and farmers.
At the time EPA set the 2020 RFS blending requirement and renewable volume obligation (RVO), the Agency projected gasoline demand would approach 143 billion this year. Today, due to the social distancing from COVID-19, as gasoline demand falls, it leads to reductions in ethanol blending, meaning the 11.56 percent RVO will not result in the use of 20.09 billion gallons in 2020 as required by statute. ACE says that without adjusting the percentage of renewable fuel volume obligated parties must use in 2020, EPA will be violating the RFS statute which amounts to an illegal waiver of blending volumes.
The letter outlines three steps EPA has the authority to take:
- use existing statutory authority to issue an interim final rule by July 1 to increase the RVO for 2020 to the percentage necessary to ensure that the full 20.09 billion gallons required by law are used;
- restore the 500 million gallons of remanded volume as ordered by the DC District Court in 2017;
- based on the recent Tenth Circuit Court precedent regarding small refinery exemptions (SREs), EPA should deny most of the 25 SRE waivers pending for the 2019 RFS compliance year.
Read excerpts from the letter below:
“COVID-19 has exposed a flaw in EPA’s RFS rulemaking approach. Social distancing, stay-at-home, and shelter-in-place orders are cutting gasoline demand by more than 50 percent in most of the country. As gasoline demand plummets during the coronavirus pandemic, so does ethanol demand, meaning the 11.56 percent RVO will not result in the use of 20.09 billion gallons in 2020 as required by statute. Without adjusting the percentage of renewable fuel volume obligated parties must use in 2020, EPA will be violating the RFS statute which amounts to an illegal waiver of blending volumes.
“Depending on how long gasoline demand continues to fall due to COVID-19 restrictions, ethanol use under the RFS could decline between 1 and 2 billion gallons. If EPA fails to act, this reduction in ethanol use would correspond to a loss of between 350 and 700 million bushels of corn demand. This would cost ethanol producers over $2 billion based on the six-month average price and farmers over $1.35 billion in 2020 according to current pricing information.”