Ethanol

Over the past year, farmers and ethanol advocates alike have pressed the Environmental Protection Agency (EPA) to be more transparent when it comes to Renewable Identification Number (RIN) waivers for small refineries. Today, EPA recognized that concern and created a handful of new sections on their website to ‘increase transparency’ surrounding the Renewable Fuel Standard (RFS) the agency said in a release. “For the first time, EPA is providing new information to the public on small refinery exemptions and RIN trading,” said EPA Acting Administrator Andrew Wheeler. “Increasing transparency will improve implementation of the RFS and provide stakeholders and the regulated community the certainty and clarity they need to make important business and compliance decisions.” According to Agriculture Secretary Sonny Perdue, the RFS is one of the top issues farmers are worried about. “We hear concerns about lack of transparency around the issuance of small refinery waivers and we are hopeful these changes will put everyone on a level playing field to receive the information at the same time,” said U.S. Department of Agriculture Secretary Sonny Perdue. “Farmers stay on top of every bit of news that comes out about the RFS and their industry, so providing them with more information is a priority. Adding timely updates to EPA’s website will be important to USDA’s customers, the people of American agriculture. We have had a great working relationship with Acting EPA Administrator Wheeler and we are pleased to continue it with this progress on RFS information.” New information on the website includes: · The number of small refinery exemption petitions received, approved, and denied for each compliance year; · The weekly average price of Renewable Identification Numbers (RINs) traded; and · The weekly volume of RINs traded. EPA officials believe the data will provide important information for renewable fuel producers, fuel refiners, importers, and marketers that can be used as they make business and compliance decisions. The EPA intends to coordinate small refinery hardship decisions with website updates allowing the recipients of waivers and the broader market receive the same information at the same time. The agency will also update information on RIN prices and trading volumes on a monthly basis. According to Bob Dineen of the Renewable Fuels Association, the addition of this data to the EPA website is a “step in the right direction.” “Today’s action may prevent small refiners from obtaining market-moving information before other participants in the marketplace,” he explained in a statement. “That’s important because it appears the RIN market was gamed earlier this year by a small group of refiners who were privy to sensitive information regarding compliance exemptions before the rest of the market knew what was going on. Hopefully, this will put a stop to that.” Dineen says these actions aren’t enough, more information and transparency is still needed. “Market participants and the public deserve to know exactly who is receiving small refinery exemptions and what criteria is being used by EPA in making the decision to grant or deny a waiver request,” he said. The Agency has been working to upgrade online systems to provide easy access to the most up-to-date information. These technical upgrades to the website serve to improve transparency in the Agency’s implementation of the statute. The updated RFS website includes interactive and dynamic features that allow users to customize display of RIN information, feedstock type, and producer attributes.

Over the next six years, Environmental Protection Agency (EPA) refinery exemptions could steal 4.6 billion gallons of domestic ethanol demand—resulting in nearly $20 billion in potential sales lost, according to a recent analysis by the University of Missouri Food and Agriculture Policy Research Institute (FAPRI). EPA exempts dozens of small refineries from blending obligations required under the Renewable Fuel Standard (RFS). The Renewable Fuels Association (RFA), a group that promotes the expansion of renewable fuels and bio-products worldwide, said FAPRI’s analysis “demonstrates the need for EPA to prospectively reallocate small refiner exemptions to larger refiners to ensure statutory RFS volumes are maintained.” FAPRI’s most recent Baseline Outlook for Agricultural and Biofuel Markets showcases the impact of small refiner exemptions in the ethanol industry. For this report, economists assume “implementation of the RFS follows recent practices, including small refinery waivers.” The report shows the following implications: RFS requirements fall from the statutory level of 15 billion gallons annually to 13.7 billion gallons. U.S. ethanol consumption drops an average of 761 million gallons each year from 2018 to 2023, 4.6 billion gallons total which equal 1.64 billion bu. of corn demand over the six-year period. Average ethanol inclusion rate in gasoline falls under 10% in 2019, and slides to 9.5% in 2023. Total consumption of ethanol in flex-fuel vehicles and mid-level blends falls 17% by 2023. Wholesale ethanol prices fall an average of 19 cents per gallon, 11%, between 2018 and 2023. Longer term, the updated outlook lowers ethanol prices by 27 cents per gallon. The industry’s gross revenues will decrease an average of $3.3 billion annually, $19.8 billion total, from 2018 to 2023. Renewable Identification Number (RIN) prices will plummet to 10 cents between 2018 and 2023. “The FAPRI analysis clearly shows that demand destruction from small refiner exemptions is real and has substantial economic consequences,” said Scott Richman, RFA chief economist in a recent press release. “If EPA continues to retroactively grant these exemptions, it will cause further harm to the ethanol industry through lower prices, reduced production and additional demand erosion.”