Ethanol Board Sees Reconsideration of Gap Waivers as Promising

The U.S. EPA announced on Sept. 14 it will deny a portion of “gap-year” small refinery exemptions (SRE) to the Renewable Fuel Standard (RFS) for 2011-2018. This still leaves 14 pending gap-year SREs and approximately 30 SREs for 2019-2020. 

“The industry has faced some of its tightest margins in the past three years, and this concept of permitting gap-year waivers would really hit us while we are down,” said Roger Berry, administrator for the Nebraska Ethanol Board. “This news is welcome because I’m not sure how many hits our ethanol producers and farmers can continue to take, and it puts some certainty back into our markets. We will continue to look for the EPA to uphold the law that is the RFS and to find ways to restore billions of gallons lost.”

For the years of 2016, 2017 and 2018 the EPA approved 85 SREs, removing the demand for over 4 billion gallons of ethanol nationwide. At the height of the economic crisis brought on by COVID-19, greater than 40% of Nebraska’s ethanol plants were offline and producers lost hundreds of millions of dollars due to decreased demand for ethanol and decreased production of distillers grains.

As the EPA considers the remaining SREs, the Nebraska Ethanol Board looks forward to the EPA similarly denying the remaining gap petitions, which will provide even more certainty and a strong market signal to producers and other stakeholders. This signal would go a long way in helping to restore the market demand for ethanol and other renewable fuels.

According to Berry, the ethanol industry in Nebraska has great potential for future growth. Environmental policy is a hot topic among voters right now, and the industry sees ethanol as a solution now for reducing greenhouse gases and improving air quality. According to Growth Energy, a national ethanol trade organization, every new truckload of American ethanol displaces more than 60 barrels of imported oil.

Even with the advent of the electric vehicle, the internal combustion engine will still be in the majority of U.S. fleet vehicles for several decades. A mere 7 percent of the national automobile fleet is replaced each year with new car sales. This doesn’t account for people purchasing used cars. At that rate, if all new cars purchased were electric, it would take more than 14 years to replace all internal combustion engines.

Automobile manufactures continue to develop technologies to increase the efficiency of the internal combustion engine. These new technologies all require a fuel with high octane. Ethanol is the least toxic, cheapest and most abundant, renewable option for octane in the nation’s fuel supply.

“With the proper policies in place today, we will continue to see the Nebraska ethanol industry as an ever-increasing economic powerhouse for the State of Nebraska,” Berry added.    

To see the full letter from the EPA click here. The explanation of denying 54 of the 68 gap-filling petitions (GFPs) is clarified on page 3.