FEW general session focuses on RVP and RIN waivers

By Tim Albrecht | June 12, 2018

A highlight of the general session Tuesday during the opening of the International Fuel Ethanol Workshop & Expo was a panel discussing renewable fuels policy, which featured a handful of industry leaders. The main two things discussed during the panel were Reid vapor pressure (RVP) relief and small refiner exemptions.

The panel, titled “Surveying the Health of Renewable Fuels Policy Under the Trump Administration,” included Brian Jennings, CEO of the American Coalition for Ethanol; Geoff Cooper, executive vice president of the Renewable Fuels Association; and John Fuher, vice president of government affairs for Growth Energy.

Fuher began the panel talking about how the involvement of the Trump administration in the ethanol discussion is something the industry hasn’t really had before. Trump took an interest in ethanol during his campaign and in the past six months has taken up the conversation again, he said.

“I think he sees this as something where he could possibly be a dealmaker,” Fuher said. “That’s why we’ve had a number of meetings on this. We’ve always had a reform discussion, but this is kind of a new entrant in the last six months. You have a high White House interest.”

Cooper moved to discussion on small refiner exemptions and how it’s a big deal for the ethanol industry. The EPA hasn’t really clarified for the public the extent of these exemptions, how much volume has been waived and whose been getting them, he said. “We’ve been able to piece together using EPA data what we feel is a pretty good estimate of the volume impacted. It’s somewhere north of 1.6 billion gallons that have been waived or exempted from RFS compliance. That’s over the course of 2016 and 2017.”

“The impact of 1.6 billion gallons lost is about $2.5 billion worth of ethanol, 570 million bushels of corn or another $2 billion of corn and you have to factor in the RINs in,” Cooper said. “We’ve estimated that’s a $5 billion loss to the people of this industry.”

A remedy to the waiver issue is a two-step process for the ethanol industry, Cooper said. “First, you have to have an immediate stop to shenanigans surrounding small refiner exemptions. We need to stop waiving through companies like Marathon, Exxon Mobil and Endeavor. These aren’t small refineries. That’s stage one. Stage two is we need some repair for the damage that has been done. How do we get those 1.6 billion gallons back? There has been some discussion as to how those gallons get reallocated to future RVOs. How do they make that up to us?”

The RFA along with ACE, the Corn Growers Association and National Farmers Union have filed a lawsuit going after a few refiners that have received exemptions, Cooper said. “Were making the argument that those exemptions were given in error by the EPA. We’re hoping to use this suit to shine some light on this very secretive process and hopefully uncover what’s been happening behind closed doors with EPA. We are doing what we can through all means available to remedy this situation, but the damage has been done.”

ACE doesn’t litigate with this administration lightly. It’s a very expensive and time consuming process, Jennings added. “We can’t take on all of them, but the three Geoff mentioned are the most egregious.”

“The value in this is ensuring a precedent isn’t set,” Jennings said. “We have to stand up for ourselves. If we allow this precedent stand, where EPA allows these refiners to skate their responsibility to blend ethanol. It will lead to problems down the road when we want to focus on E20 or E30.”

John agreed with Jennings’ point about precedent. “Right now, we’ve had 15 billion gallons of ethanol. available under the RFS, because this industry joined together and got that precedence in the courts. What EPA is doing is outright egregious and they’ve definitely destroyed demand. We’ve shown this kind of action can be very impactful and effective for those that produce ethanol.”

The discussion moved briefly to EPA Administrator Scott Pruitt and his current tour across the Midwest. Jennings hoped Pruitt would get “a little truth serum” from rural America and farmers on his tour. “Frankly, he needs to get his assed chewed by ethanol advocates and farmers. He needs to get back to D.C. and take on some of these actions that have been promised of him.”

The session closed with discussion on if RVP relief or the elimination of hardship waivers will come first. The ethanol industry needs both things to occur, Cooper said. “The oil refiners got exactly what they wanted. They destroyed the RIN market and they got exempted from 1.6 billion gallons of RFS obligations. We need something just to get back to zero. I hope that when it comes that includes a package to get back the value that we lost and we get a stop to the way we do these waivers now. I hope we get them both and get ‘em soon.”

Jennings agreed with Cooper on needing both to occur, but wants a reset on the discussion involving the RFS. “I think something that’s lost in this discussion involving Trump in trying to broker a win-win deal between refiners and farmers is the lack of the appreciation of why we have an RFS in the first place. We can’t walk away from this program. It doesn’t have an expiration and its incredible leverage when it doesn’t have a sunset date.

Fuher thinks both RVP relief and the elimination of hardship waivers doesn’t occur at the same time and one doesn’t move before the other. “I think in the president’s mind it’s going to RVP, something involving hardship waivers and a mystery third item. We need to be sure when we go into that conversation we get what we want out of those two items and we’re ready for the third thing.”