Home Energy Refiner Waivers Could Cost Ethanol Industry $20 Billion

Refiner Waivers Could Cost Ethanol Industry $20 Billion

SHARE

New research estimates the U.S. ethanol industry could lose 4.6 billion gallons of domestic demand and $20 billion in sales from the administration’s approach to the Renewable Fuel Standard. Economists at the University of Missouri estimated the losses over the next six years, if the Environmental Protection Agency continues exempting dozens of small refiners from their blending obligations under the RFS. The research estimates U.S. ethanol consumption will drop by an average of 761 million gallons per year between 2018 and 2023, or a total of 4.6 billion gallons over the six-year period. That is equivalent to 1.64 billion bushels of corn demand, or nearly 300 million bushels per year.

The Renewable Fuels Association said the analysis demonstrates the need for EPA to reallocate small refiner exemptions to larger refiners to ensure statutory RFS volumes are maintained. RFA Chief Economist Scott Richman says the research, “Clearly shows that demand destruction from small refiner exemptions is real and has substantial economic consequences.”

The RFA, along with the American Farm Bureau Federation, National Corn Growers Association, National Farmers Union, National Sorghum Producers, American Coalition for Ethanol, and Growth Energy penned a letter to President Trump Wednesday urging the administration to allow E15 sales year-round. The groups also expressed concern that any benefit from year-round E15 sales and proper implementation of the Renewable Fuel Standard could be nullified if refiners are given further regulatory bailouts that undercut the spirit and intent of the law.

The letter follows comments made by Agriculture Secretary Sonny Perdue last month at the Farm Progress Show that an announcement on the RFS and E15 would be coming soon. The letter also notes that ethanol prices, RIN credit prices, and ethanol profit margins are falling, as small refiner exemptions issued by EPA have reduced ethanol demand and inflated stocks.

Source: NAFB News Service