Trump Administration Must Shut Down RFS Waiver Giveaways

August 21, 2019

Allow us to take a few minutes and reflect on the 15 years we have spent pursuing solutions to the issues that have confronted U.S. agriculture and forestry in recent decades.

Our first platform, 25x’25, has strongly pursued growing levels of renewable energy generation from farms, ranches, forest and other rural lands. The movement has seen remarkable progress towards its goal of 25 percent of our nation’s energy coming from renewable resources by 2025.

Solutions from the Land (SfL) has a wider aim, facilitating the efforts of all farmers, ranchers and forestland owners to adopt Climate Smart Agriculture (CSA) practices that can allow them to adapt their lands to the growing changes in our climate. CSA techniques also sustain strong crop production in the face of those changes to the climate that threaten our ability to work the land, and even stem those changes through enhanced soil health, carbon retention and other techniques that reduce greenhouse gas emissions (GHGs).

What has made this progress possible is the adoption at the local, state and federal levels of enabling policies that promote, encourage and reward producers in a manner that is both sustainable and highly productive.

Among those policies is the Renewable Fuel Standard (RFS), which was authorized under the Energy Policy Act of 2005 and expanded under the bipartisan Energy Independence and Security Act of 2007. The RFS has been a major milestone in progress towards sustainable farm production, and promotes biofuels – including those produced from corn and soybean feedstocks – which produce far fewer emissions than their petroleum counterparts. They also provide needed additional income in a farm sector hammered in recent years by flooding, droughts and, more recently, Washington’s engagement in trade disputes, which are damaging previously strong U.S. farm trade partnerships.

Now piling on to the distress already being felt in the U.S. farm sector is the unprecedented explosion, beginning about three years ago, of exemptions being granted to dozens of refineries to waive their RFS blending obligations. While the RFS legislation adopted 12 years ago does provide for the granting of waivers to “small” refineries (75,000 barrels per day of output or less) if they can show “disproportionate economic hardship,” EPA has been granting waivers in the dozens to refineries that, while small, are owned by rich oil giants like Exxon-Mobil and Chevron.

The biofuels industry pleaded with the White House to stop issuing waivers, or at least account for the volumes of biofuels being lost by reallocating them to other refineries, as the industry says a 2016 U.S. Court of Appeals ruling requires. After lobbying directly with the White House for months, biofuel producers were stunned by the recent EPA announcement that another 31 waivers would be granted for 2018.

While the waivers are saving many profitable oil companies millions of dollars, they have eliminated demand for biofuels by at least 2.6 billion gallons. The Renewable Fuels Association says that at least 15 ethanol plants have now shut down or idled since EPA began its refinery bailouts and more than 2,500 jobs have already been affected.

In a high-profile development, POET, the world’s largest biofuel producer, announced yesterday that it has idled production at its bioprocessing facility in Cloverdale, IN, due to the Trump administration’s exemptions decision, and will eventually shut down the annual processing of more than 30 million bushels of corn. The company has also reduced production at half of its biorefineries, with the largest drops taking place in Iowa and Ohio. As a result, numerous jobs will be consolidated across POET’s 28 biorefineries and corn processing will drop by an additional 100 million bushels across Iowa, Ohio, Michigan, Indiana, Minnesota, South Dakota and Missouri.

POET President and COO Jeff Lautt echoed the widening anger within the industry when he said that while his company made strategic decisions to support President Trump’s goal of boosting the farm economy, those goals are being contradicted by bailouts to oil companies. The result, he said, is “pain for Midwest farmers and the reduction of hundreds of jobs and hundreds of millions of dollars of economic activity.”

The biofuels industry also points out that the waivers run in sharp contrast to the president’s roll-out of year-round E15 earlier this summer, asserting that the ethanol volumes lost wipe out any near-term growth potential for year-round E15 sales.

With ethanol production and demand continuing to slide, prices sinking and margins bleeding red, farmer resentment is growing rapidly. Reports out of Washington this morning indicated the president is reconsidering his EPA’s waiver decision. Solutions from the Land can only hope Mr. Trump will disregard EPA’s current strategy and back off from these giveaways to highly-profitable oil companies. Rural America deserves better.

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An Agricultural Renaissance, led by innovative and entrepreneurial farmers, ranchers and foresters constructing sustainable, profitable and resilient systems that lay the foundation for a world of abundance on many scales capable of producing nutritious food, feed, fiber, clean energy, healthy ecosystems, quality livelihoods, and strong rural economies.