OPINION: Reallocation key to an honest Renewable Fuel Standard

By Emily Skor, CEO of Growth Energy | December 05, 2018

The Renewable Fuel Standard is one of the great success stories for our nation. Motorists have seen cleaner, more affordable choices at the pump, and our corn farmers have seen demand for their product grow through renewable biofuels.

Recently, the Environmental Protection Agency released their final 2019 renewable volume obligation (RVO) numbers, which set the standard for next year’s production. The 2019 RVOs provide a market for 19.92 billion gallons of biofuels, including 15 billion gallons of conventional biofuel, and help ensure that renewable, low-carbon biofuels aren’t squeezed out by petroleum interests.

On its face, these numbers show strong promise for biofuels. Our nation’s farmers are still weathering through low commodity prices and international trade disputes, so they need and deserve this certainty and market access for their products. And homegrown biofuels, like ethanol, have historically delivered that market.

However, the 2019 RVO numbers do not tell the whole story.

By law, EPA may provide special “small refinery exemptions” to “small” refiners who have proven “disproportionate economic hardship” and face unique circumstances. But in recent years, that’s proven not to be the case.

It was recently revealed that under former EPA Administrator, Scott Pruitt, the oil giant Chevron Corporation received a small refinery exemption. In 2017, Chevron reported $9.2 billion in net income, so it is hard to imagine how the terms “small” or “hardship” applied to their eligibility in this case.

The Chevron revelation is only the most recent example in a long line of similar “hardship” exemptions the EPA has given to some of the most profitable refiners in the world over the last two years. These handouts have destroyed demand for 2.25 billion gallons of American-made ethanol across dozens of similar exemptions.

The U.S. Department of Agriculture recently reported that farmers are suffering from a 46 percent decrease in farm income over the last five years; they simply cannot afford the EPA to miss any more opportunities to chart a new course for biofuels and America. The EPA must prevent “small” refinery exemptions from driving farmers into bankruptcy and drying up business in rural America. Acting EPA Administrator Andrew Wheeler must follow the law and reallocate lost gallons to give farmers the boost they need, keep the rural economy moving, and ensure that the biofuel targets set by Congress are actually met.