The massive increase in small refinery exemptions (SREs) under the Renewable Fuel Standard has eroded demand for ethanol and forced numerous plants to idle or shut down, according to testimony today by Renewable Fuels Association President and CEO Geoff Cooper before the House Energy and Commerce Committee’s Subcommittee on Environment & Climate Change. Cooper laid out numerous challenges facing the industry as a result of the Environmental Protection Agency’s abuse of the SRE program.
“EPA’s secretive and underhanded approach to the SRE provision in recent years has destabilized the RFS, reduced the production and use of clean renewable biofuels, increased GHG emissions and tailpipe pollution, and led to lost jobs and economic opportunity in rural America,” Cooper stated in his testimony.
Cooper also stressed the enormous value of ethanol plants to their local rural communities and detailed the harsh effects that closing a plant can have on small towns already facing other economic challenges.
“Ethanol plants serve as vital economic engines for rural communities across the country, providing good jobs, creating value-added investment opportunities for farmers and other rural Americans, and developing new markets for crops produced by local growers,” Cooper said. “We estimate that the ethanol demand loss associated with SREs has led to the layoff or furlough of more than 700 workers in the ethanol industry since the spring of 2018. In addition, more than 2,800 full-time jobs in related industries and sectors have also been affected.”
A recent supplemental proposal by EPA—meant to implement the relief package promised by President Trump in August—does little to allay concerns in farm country, Cooper said. EPA’s supplemental proposal has only led to more confusion and will not likely raise domestic conventional renewable fuel blending to the required volume of 15 billion gallons.
“The EPA incomprehensibly proposed to base its estimates of the gasoline and diesel that would be exempted in 2020 on the historical recommendations for exempted volumes it received from the Department of Energy, rather than the actual exemptions it granted,” Cooper said. “The irony of this proposal is that EPA has never followed DOE’s recommendations in deciding SRE petitions.”
For the 2016-2018 compliance years, he noted, DOE on average recommended that 7.3 billion gallons of gasoline and diesel be exempted from RFS obligations, but EPA actually exempted an average of 12.8 billion gallons–75% more. “In short, the supplemental proposal fails to provide the necessary assurances that the statutorily required volume of 15 billion gallons of conventional renewable fuel will actually be enforced in full in 2020 and beyond.”
Cooper ended his testimony stating RFA’s support for legislation introduced in the House of Representatives that would help reform the SRE program. House Agriculture Committee Chairman Collin Peterson (D-MN) together with Congressman Dusty Johnson (R-SD) and a bipartisan group of original co-sponsors have introduced H.R. 3006, the Renewable Fuel Standard Integrity Act of 2019, which would bring badly needed transparency to the SRE process and provide renewable fuel producers and other stakeholders with greater certainty surrounding implementation of the RFS.