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Executive Branch Highlights Ethanol in Waiver Denials and E15 Promise

Wall Street Journal writers Lindsay Wise and Andrew Restuccia reported on Monday that, “The Trump administration will deny oil refiners’ retroactive requests for exemptions from U.S. biofuel laws, a major boon for Iowa, the leading producer of biofuels and a crucial state that could help determine which party wins the presidency and control of the Senate.

“The federal Renewable Fuel Standard requires that oil refineries blend billions of gallons of biofuels into fuel each year or pay a compliance fee. Small oil refineries can apply for waivers based on financial hardship. The Environmental Protection Agency said on Monday it will deny so-called gap-filling petitions seeking retroactive exemptions for 2011-2018 compliance years.

‘This decision follows President Trump’s promise to promote domestic biofuel production, support our nation’s farmers, and in turn strengthen our energy independence,’ EPA Administrator Andrew Wheeler said.

Des Moines Register writer Donnelle Eller reported on the front page of Tuesday’s paper that, “Ethanol and biodiesel have been a boon to Iowa and Midwest farmers, boosting corn and soybean prices for nearly two decades. Iowa produces the most ethanol and biodiesel in the U.S. And it’s a national leader in growing corn and soybeans, the crops used to make the biofuels.”

“EPA will reject most ethanol waivers,” by Donnelle Eller. The Des Moines Register (front page- September 15, 2020).

The Register article also stated that, “Iowa leaders celebrated Monday’s announcement, noting that farmers have struggled in recent years: Trade wars have slashed exports. The coronavirus slammed the brakes on demand for ethanol, along with gasoline. And the hurricane-force winds of a derecho last month trampled an estimated 14 million acres of corn and soybeans across a third of Iowa.”

Recall that news reports last week indicated that President Donald Trump directed EPA to reject the requests.

Capehart, Tom, Michael McConnell, Olga Liefert, David Olson, Feed Outlook, FDS-20h, U.S. Department of Agriculture, Economic Research Service, August 14, 2020.

Reuters writer Stephanie Kelly explained on Monday that, “Under the U.S. Renewable Fuel Standard, refiners must blend some 15 billion gallons (57 billion liters) of ethanol into their gasoline each year or buy tradable credits from those that do. Small refiners have also been able to seek an exemption if they can prove financial harm from the requirements.

“The Trump administration has roughly quadrupled the number of exemptions given out to refiners in a trend that had angered the biofuel industry.

In January, an appeals court handling a case initiated by the biofuel industry cast a cloud of doubt over the EPA’s waiver program, ruling that waivers granted to small refineries after 2010 should only be approved as extensions. Most recipients of waivers in recent years have not continuously received them.”

Ms. Kelly noted that, “That triggered a wave of requests for retroactive relief by refiners seeking to comply with the court decision. Since March, 17 small refineries in 14 states submitted 68 petitions, Wheeler said in a memo. The Department of Energy, which advises EPA on the waiver requests, had transmitted its findings on 54 of the petitions.”

Meanwhile, Bloomberg writer Jennifer A Dlouhy reported on Saturday that,

President Donald Trump promised to allow higher-ethanol gasoline to be distributed using existing filling station pumps, a move designed to bolster support among corn farmers and biofuel producers in Iowa and other Midwestern swing states.

“Trump announced the decision Saturday on Twitter after a conversation with Senator Joni Ernst, an Iowa Republican who’s been pushing for the change as part of her own re-election battle.

“‘Subject only to State approval, our important Ethanol Industry will be allowed to use the 10% Pumps for the 15% BLEND,’ Trump tweeted.”

Ms. Dlouhy pointed out that, “The move builds on earlier Trump administration changes designed to boost U.S. sales of corn-based ethanol and expand the market for a 15% ethanol-gasoline blend known as E15. In 2019, the Environmental Protection Agency lifted restrictions that blocked the sale of E15 in the summer in many areas of the U.S. where smog is a problem.

“Yet ethanol advocates have argued more filling stations would be enticed to offer E15 if they could use existing infrastructure to distribute it. Most gasoline sold in the U.S. is a 10% blend known as E10.”

In other news, Jennifer A Dlouhy reported last week at Bloomberg that, “Trump administration officials are developing a plan to offset the potential economic damage of denying dozens of refineries waivers from biofuel-usage mandates: giving them financial aid.

“The approach is actively being discussed by top Environmental Protection Agency officials as the administration courts two important voting blocs for President Donald Trump: blue-collar oil industry workers, and agricultural interests in the Corn Belt. The talks were described by three people familiar with the matter who asked not to be named discussing the administration’s private deliberations.

“It’s unclear what statutory authority — or even financial account — the EPA might tap for the aid, though agency officials are considering coronavirus-relief funding allotted to the Agriculture Department, the people said. Under that approach, aid would be distributed to small refineries denied waivers from biofuel quotas.”

Keith Good

Keith Good

Keith Good is the social media manager for the farmdoc project at the University of Illinois. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily FarmPolicy.com News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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