Government

Iowa leaders challenge refinery ethanol exemptions

FILE PHOTO: Scott Pruitt, then-administrator of the U.S. Environmental Protection Agency, answers a question during the Concordia Summit in Manhattan, N.Y., on Sept. 19, 2017. REUTERS/Jeenah Moon
FILE PHOTO: Scott Pruitt, then-administrator of the U.S. Environmental Protection Agency, answers a question during the Concordia Summit in Manhattan, N.Y., on Sept. 19, 2017. REUTERS/Jeenah Moon

Leaders in Iowa ethanol and agriculture warn that federal plans to make small refineries exempt from renewable fuel rules “would irreversibly undermine” the nation’s Renewable Fuel Standard.

In Council Bluffs on Wednesday, Monte Shaw, executive director of the Iowa Renewable Fuels Association, and Iowa’s Secretary of Agriculture Mike Naig held a news conference to criticize the small-refinery exemptions being considered by the Environmental Protection Agency.

Naig said there are currently 39 small-refinery exemptions before the EPA.

“We believe it is time for the EPA to address this threat to the Renewable Fuel Standard,” Naig said, adding that over the last two years, the agency has granted waivers accounting for 2.6 billion gallons of ethanol or about 1 billion bushels of corn. “This happens at a time when our farmers and rural America can least afford it.”

The Renewable Fuel Standard requires refiners to blend certain volumes of biofuels, like ethanol, into their fuel each year or buy credits from refiners who do. Refiners with a capacity of less than 75,000 barrels per day can receive a waiver as long as they can prove that complying with the Renewable Fuel Standard would cause “disproportionate economic harm.”

However, with the cost of a gallon of ethanol at about $1.30 and Renewable Identification Number credit prices as low as 8 cents in recent weeks, Shaw said economic harm should be incredibly difficult to justify.

Shaw said the nearly 40 exemptions out there could “rip the heart out” of the Renewable Fuel Standard.

“If you can justify granting a small-refinery exemption under today’s circumstances ... where you can buy a (Renewable Identification Number) for 8 cents, then what the EPA would really be saying is that it’s always going to grant small-refinery exemptions, and the hope of ever having a true 15 billion-gallon (Renewable Fuel Standard) is dead,” Shaw said.

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Last week, U.S. Sen. Chuck Grassley, R-Iowa, sent a letter to U.S. Department of Energy Secretary Rick Perry asking for more clarity on the department’s process when reviewing refinery hardship exemptions.

“EPA has granted an unprecedented number of small refinery hardship exemptions for 2016 and 2017 and even more small refineries are seeking exemptions from the (Renewable Fuel Standard) for 2018,” Grassley said in the letter. “With (Renewable Identification Numbers) at multiyear lows, it’s hard to comprehend the alleged disproportionate economic hardship that any refinery could face.”

Iowa ethanol plants produced a record-breaking 4.35 billion gallons last year — making for around 27 percent of the nation’s total production.

The state’s ethanol production in 2018 was up from 4.2 billion gallons in 2017, but still fell below the 4.5 billion capacity of Iowa’s ethanol producers, according to a Wednesday news release from the Iowa Renewable Fuels Association.

Officials said small-refinery exemptions — paired with trade disputes with China — hurt last year’s margins.

According to the Renewable Fuels Association, overall U.S. ethanol consumption declined last year.

The association cites the 48 small refinery exemptions approved last year by former EPA Administrator Scott Pruitt as a main factor for the drop in ethanol use.

l Comments: (319) 398-8309; mitchell.schmidt@thegazette.com

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