The biofuel group Growth Energy called on the EPA to stop handing out waivers it says oil refiners are using to avoid complying with the federal mandate to mix corn ethanol into gasoline. The agency could end up reducing the Renewable Fuel Standard by 1 billion gallons this year through the waivers, which were intended to help small refiners stay in business, according to two analyses.
Farm groups and the ethanol industry said the EPA is abusing its authority by issuing the waivers in private just months after it publicly set the U.S. biofuels targets. So far, the agency has issued waivers from the RFS for 2016 and 2017. A refinery executive told the Houston Chronicle that the EPA “was handing out those exemptions like trick or treat candy.” The EPA exempted 20 refineries from the 2016 RFS and 25 refineries from the 2017 mandate. Previously, only a few waivers had been issued each year.
The exemptions for 2017 could equal 1 billion gallons of ethanol, and the waivers from the 2018 RFS are likely to be comparable, said Geoff Cooper of the Renewable Fuels Association (RFA) in a blog. The ripple effect would reach farmers in the form of reduced demand for corn to make ethanol and lower corn prices. The National Corn Growers Association calculated that it takes roughly 2.1 million acres of corn — equal to the corn area in Michigan — to make a billion gallons of ethanol.
A spokesman for the oil industry was not immediately available for comment.
The ethanol mandate for this year is 15 billion gallons, the same as in 2017. The focus on waivers has increased as the oil industry argues for relaxation of the RFS. It says the cost of compliance is prohibitively high. Ethanol makers say that EPA approval of the year-round sale of E15, gasoline that is 15 percent ethanol, would alleviate the problem.
“We ask that EPA immediately cease issuing waivers and pause any waiver applications being considered until the agency conducts a full, transparent public comment process to help assure all stakeholders that the new expansion of small refinery waivers are consistent with the goals of the RFS,” said Growth Energy president Emily Skor. The timing of the waivers, she said, creates “suspicion that the EPA is pressing its thumb on the scale to grow oil industry profits.” The National Farmers Union said the EPA should either stop issuing the waivers or require other refiners to make up for the exemptions.
RFA president Bob Dinneen said that issuing “secret compliance bailouts to refining giants like Andeavor goes far beyond the pale and stomps all over President Trump’s commitment to protect the RFS.” The trade group submitted a public-records request to the EPA and the Energy Department for information on who has received exemptions and how many waivers have been issued. Andeavor, a large and profitable refiner, received waivers for its three smallest refineries, said Reuters earlier this week.
There are 54 small refineries in the country, about twice the number that received waivers for 2017, and they account for roughly 10 percent of U.S. crude oil refining capacity. If the EPA gave waivers to all of them, the RFS for 2018 would be effectively reduced by 2 billion gallons, two University of Illinois economists said at the end of 2017. Waivers would be “a backdoor procedure” to reduce the RFS and “could be large enough to push the [corn ethanol] mandate below the E10 blend wall,” they wrote at farmdoc Daily.
The blend wall is the maximum amount of ethanol that can be mixed into gasoline at the current 10 percent rate.