EPA ruling on 2020 Renewable Volume Obligations undermines ethanol industry

LINCOLN, Neb. — The Nebraska Ethanol Board (NEB) is disappointed in the final rule setting the renewable volume obligations (RVOs) for ethanol for 2020 issued by the U.S. Environmental Protection Agency (EPA) on Dec. 19. The rule sets conventional ethanol demand for next year at 15.8 billion gallons and not at the 16.34 billion gallons necessary to immediately move the Renewable Identification Number (RIN) market and incentivize industry growth.

“The EPA missed a big opportunity to restore market faith that there will be 2020 ethanol demand at the levels laid out in the Renewable Fuel Standard (RFS) law,” said Roger Berry, NEB administrator. “We appreciate that the EPA increased the RVO by .8 billion gallons of conventional ethanol, but there is no evidence this addition will ultimately reflect the number of lost 2020 gallons given the EPA’s historical practice of granting retroactive Small Refinery Exemptions (SREs) without reallocation. This ruling also does not set safeguards into place that will ensure SREs are only granted to refineries who truly prove economic hardship.”

Since 2017, the EPA has granted roughly 40 percent more waived gallons than the annual average of about .8 billion that were recommended to have been waived by the U.S. Department of Energy (DOE).

“The EPA has now had its say on next year’s ethanol demand volumes,” Berry said. “We are going to work with our political champions and industry peers to ensure that the EPA does not grant more than .8 billion in SREs for 2020, so that there will be a solid 15 billion gallons of stable conventional ethanol demand next year. That outcome will help restore confidence and growth in the ethanol industry, and we look forward to seeing improvement as soon as possible.”

“We are cautiously hopeful that the EPA will start strictly following DOE’s recommendations, as Secretary Perdue told me in person last week that 15 billion gallons of conventional corn ethanol truly means 15 billion gallons,” said Nebraska Ethanol Board Chairman Jan tenBensel.   

A full copy of the ruling can be found here.