POET'S POLICY VOICE
POET's involvement in federal and state policy issues.
EPA Threatening RFS Goals, Creating Harm across Rural America
For the past few years, the EPA has been using the RFS to destroy demand for biofuels, reducing the price of commodities and gutting rural economies in the process. Throughout 2019, farmers saw farm debt increase and corn grind drop across the country. Biorefineries announced scaled back production, further impacting domestic markets for corn. In August, POET announced it would be forced to idle production at its Cloverdale biorefinery due to EPA mismanagement of the RFS, dropping over 30 million bushels of corn processing annually in Indiana. Like many other ethanol producers, POET reduced corn processing at half of its biorefineries, dropping processing of an additional 100 million bushels of corn across Iowa, Ohio, Michigan, Indiana, Minnesota, South Dakota, and Missouri. This action resulted in hundreds of direct and indirect jobs lost and hundreds of millions of economic activity wiped away, amplifying the economic downturn being seen across the Midwest.
Small Refinery Waivers
The EPA continues to bail out some of the nation’s largest and most profitable oil refiners with small refinery exemptions (SREs), undermining President Trump’s promise to support the Renewable Fuel Standard (RFS), grow biofuel volumes, and protect rural jobs.
During the first three years of the Trump Administration, the number of SREs has skyrocketed 485 percent. The EPA’s unprecedented abuse of the waiver program has cut biofuel demand by 4 billion gallons and slashed corn demand by 1.4 billion bushels. This senseless demand destruction is closing biorefineries, killing jobs, creating roadblocks for innovation, and inflicting severe damage on the rural economy.
Over the last three years, the EPA cut overall biofuel demand through the small refinery waivers, but they also refuse to account for and make up the exempted gallons through RFS mechanisms. This means that the total blended volume is far below RFS intended levels and continues to drop further from RFS goals each year when additional waivers are issued. The EPA continues to make excuses when they miss opportunities to turn around this trend. Each year the EPA has the opportunity to adjust the RVO levels to account for the lost gallons, but refuses to do so leaving farmers with a declining domestic market for their corn.
Blocking Cellulosic Innovation
EPA is also helping Big Oil obstruct competition from renewables by blocking support for cellulosic biofuel production. EPA is underestimating production volumes for cellulosic ethanol, severely undermining the value of D3 RINs creating an unsustainable business environment for this nascent industry.
Through 2017, RIN prices remained at levels that encouraged continued investment in cellulosic fuels, with D3 RIN values topping $3.00. As a result, 2017 was a year of rapid progress in the cellulosic industry – POET-DSM designed and installed a pretreatment system at Project LIBERTY, announced construction of an on-site enzyme manufacturing facility to directly pipe DSM enzymes into the process, and ramped up biomass purchasing in anticipation of increasing production levels in 2018. However, as a result of the low RVO levels over the past few years, D3 RN values have declined, with a precipitous drop in values coinciding with EPA’s recent issuance of 31 additional exemptions. D3 values are now 80% less than their 2017 highs. Such low values undermine the industry’s investment in this technology and create roadblocks for future innovation. Given that cellulosic is an emerging industry it is vital that the policies developed to support this innovation and move technologies from test tube to industrial scale are administered as intended.
And at the same time, EPA is refusing to approve new applications for D3 RINs by changing the approval processes without formal rulemaking. To further the problem, the new processes are not yet attainable, essentially blocking any new plants from generating D3 RINs.
The solution is simple – EPA must stay true to the President’s priorities and the intent of the RFS. POET has appealed to the White House and the EPA to end this abuse and to uphold the letter of the law – before more rural jobs and farms are needlessly lost.
The U.S. Environmental Protection Agency (EPA) on Friday, May 31, issued a final rule to allow consumers uninterrupted access to E15, a fuel blend with 15 percent ethanol. The announcement comes following a public comment period on a proposed rule and in time for this summer’s driving season.
The EPA’s rule changes the nearly decade-old limitations on year-round E15, allowing consumers to have year-round access to the clean, lower-cost option at the pump. Previously, E15 sales were restricted in most markets from June 1 to Sept 15.
Resetting Renewable Fuel Standard Targets
The Clean Air Act grants the U.S. Environmental Protection Agency (EPA) authority to adjust volumetric targets for renewable fuels established by Congress under certain circumstances. The EPA is expected to use this authority to reset annual volumetric targets for 2020-2022.
As the recognized global leader in both starch-based and cellulosic biofuel production, POET remains committed to ensuring that any new volumetric targets proposed by the EPA serve to strengthen the Renewable Fuel Standard and continue to encourage future growth and investment in homegrown biofuels.
Expanding State Low Carbon Fuel Standards
In an effort to reduce lifecycle greenhouse gas emissions and improve air quality, a number of policymakers are working at the state level to enact or strengthen Low Carbon Fuel Standard (LCFS) programs. These programs are designed to encourage the use of cleaner fuels with lower carbon intensity.
At POET, our environmental mission is central to who we are and what we do. Cleaner-burning renewable biofuels, including mid-level blends like E15 and E30, are the best way for states to achieve their carbon reduction goals. POET continues to partner with policymakers across the U.S. to ensure that the many environmental benefits of biofuels are appropriately recognized and accurately measured in each state’s LCFS program.
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