Government

Boosted for now, biofuel standard faces reset

Advocates: Higher target won't offset damage already done

Cornstalks stand at an orchard in Pennsylvania in October. CREDIT: Bloomberg photo by Michelle Gustafson.
Cornstalks stand at an orchard in Pennsylvania in October. CREDIT: Bloomberg photo by Michelle Gustafson.

WASHINGTON — The U.S. Environmental Protection Agency on Friday increased its annual blending mandate for advanced biofuels, drawing praise from farm-state politicians and the biofuels industry but disappointment the government had not done more to protect the agricultural market.

Under the Renewable Fuel Standard, oil refiners must blend increasing amounts of biofuels into their gasoline and diesel supplies each year or purchase credits from those that do.

The EPA lifted its requirement for advanced biofuels by 15 percent for 2019, while keeping steady the volume for conventional biofuels like corn-based ethanol.

The 2019 target could be the last increase for years as the federal government considers sweeping changes to the biofuel mandate — even though President Donald Trump has pledged support and promised to undo a regulation preventing more sales of gas containing a higher percentage of ethanol.

Refiners and some environmentalists will be pressuring the EPA to dial back the 13-year-old biofuel law next year, even as Trump is courting voters in Iowa.

Iowa Republican Sen. Chuck Grassley welcomed the increase in the advanced biofuels requirement, but slammed the EPA for its refusal to reallocate biofuel volumes that previously were waived under a small refinery exemption program — one of the most controversial issues dividing the corn lobby and the oil industry.

“I’m disappointed the rule didn’t reallocate waived volumes to make up for the damage done by former Administrator Pruitt,” Grassley said in a statement.

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Small refineries can be exempted from the mandate if they prove that complying would cause them financial strain.

Since Trump’s election and under the former EPA administrator Scott Pruitt, who stepped down in July, the EPA vastly expanded the number of waivers it handed out to small refineries, in a bid to reduce the industry’s compliance costs.

“As corn farmers, we want to ensure the (biofuel law) continues to provide affordable fueling options for consumers, advancing America forward in its goals to be a leader in clean, renewable energy, and we have the ability to do that in America’s heartland,” said a statement from Curt Mether, president of the Iowa Corn Growers Association. “Yet, while the farm economy is truly struggling, the EPA continues to hand out … waivers to oil companies making billions in profits in the name of economic hardship.”

Grant Kimberley, executive director of the Iowa Biodiesel Board and Iowa Soybean Association’s director of market development, said in a statement the organization appreciates the “modest growth” in biodiesel levels. But the EPA’s own data. he said, show the exemptions reduced demand for biodiesel this year by more than 300 million gallons — equal to all of Iowa’s biodiesel production.

The Trump administration for now has put a hold on processing waiver applications as the EPA and the Department of Energy review the scoring system used to evaluate them, Reuters reported, citing sources.

Under the fuel law, Congress sought to direct an increasing amount of biofuel into the nation’s gasoline and diesel supply — as much as 36 billion gallons in 2022.

Lawmakers recognized that corn-based ethanol would fulfill much of the mandate initially, and anticipated the program would provide a launchpad for next-generation advanced biofuels from grass, algae, wood and other materials. But cellulosic biofuel has been slow to commercialize, with production lagging below targets.

Now the EPA is taking advantage of a safety valve Congress built into the program, embarking on a broad “reset” of the fuel standard that could lead to lowering targets.

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Refining industry leaders view the reset as a chance to recalibrate a program created under vastly different conditions 13 years ago.

“We need to look at this issue in a different lens,” said Frank Macchiarola, a group director at the American Petroleum Institute. “It’s a different energy landscape than it was.”

But the review will come just as presidential hopefuls descend on Iowa in the run-up to its first-in-the nation caucuses in early 2020.

Trump easily won Iowa in 2016’s presidential election after pledging to back ethanol.

But in November’s midterms Democrats flipped two Republican-held House seats and now hold three of Iowa’s four U.S. House districts.

Bloomberg, Reuters and Bill Lukitsch of the Quad City Times contributed to this report.

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