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Washington (AP) —Tuesday’s Biden administration lowered its annual production requirements for ethanol and other biofuels to account for the decline in demand as a result of the coronavirus pandemic.
At the same time, the government said it moved to reject the request for an exemption from the ethanol requirement by small oil refineries and did not show that the exemption was justified under the Clean Air Act.
In summary, these actions are a “long-standing mismanagement” by the Trump administration and a “commitment to reset and strengthen” the Federal Renewable Fuel Standards (RFS) following the turmoil in the gasoline market due to the COVID-19 pandemic. “It reflects, officials said. ..
With actions announced on Tuesday, authorities said, “By setting an ambitious level in 2022 and strengthening the foundation of science- and law-based programs, we can put the RFS program back into growth mode.” Administration Secretary Michael Regan said. Protection Agency that sets ethanol requirements under RFS.
The lower production target is a victory for the oil industry, which claims that biofuel mixing is costly and raises gasoline prices. Ethanol producers, including domestic corn farmers, say that corn-based renewable fuels are environmentally friendly and help meet federal climate change goals.
Federal law requires refiners to mix billions of gallons of biofuel into a country’s petrol supply or buy credit from the mixing refinery. Refineries can seek an exemption if they can show that meeting the ethanol quota poses financial difficulties for the company.
The ethanol industry struggled last year as workers stayed home instead of commuting and gasoline usage fell as vacation trips stopped. As fuel sales began to recover, demand for ethanol increased and prices rose.
In addition, Midwestern farmers had good corn growth, abundant supply eased corn prices and reduced ethanol producer input costs. The combination of higher demand and lower input costs has brought ethanol profits closer to record levels.
The oil industry is calling on the EPA to set its obligations for corn-based ethanol in 2020, 2021 and 2022 to current levels of use. Currently, most of the gasoline sold in the United States is 10% ethanol, and oil refiners want government requirements to be met with that level of sales.
Demonstrating the quirks of the RFS program, the EPA set production targets for 2020, 2021 and 2022 on Tuesday. The EPA proposed 12.5 billion gallons in 2020, 13.3 billion gallons in 2021, and 15 billion gallons of corn-based ethanol in 2022. The 2020 figure is down from the 15 billion gallons forecast set by the Trump administration, close to the actual amount of corn ethanol produced last year. The production volume in 2021 is also close to the expected production volume.
The Ethanol Lobbying Group, the Renewable Fuels Association, called the retroactive reductions in the 2020 target “unprecedented” unfair, but said it welcomed the 2022 15 billion gallons of corn ethanol forecast. I did.
Senator Charles Ernest Grassley, a stubborn ethanol advocate, has blamed the move to adjust the 2020 target in the last month of 2021. He called it the “benefit of big oil” and asked: Will you significantly reduce your 2022 obligations? It’s shameful and angry for Iowa producers and those who care about our environment. “
According to Grassley, EPA’s actions are inconsistent with Biden’s campaign promise to “promote and advance” ethanol and other biofuels.
“As he promised Iowa on the road to the campaign, another word about President Biden’s so-called climate priorities until he puts money in his mouth and delivers cleaner, cheaper biofuels to Americans. I don’t want to hear, “he said.
Nonetheless, the Ethanol Group praised the EPA’s move to reject all pending small refinery exemption petitions following a court ruling earlier this year.
The EPA package “represents a small step in the right direction for the country’s ethanol producers and farmers,” said Geoff Cooper, RFA’s president and CEO.
Refinery representative American Fuel & Petrochemical Manufacturers said the 2022 proposal would “unnecessarily increase already record RFS compliance costs” and raise gasoline and diesel prices.
“The RFS is broken and needs to be fixed. The EPA’s proposal will make things worse for both refiners and consumers,” said Chet Thompson, Group President and CEO.
The law sets a benchmark for the ethanol industry to meet, but if the program determines that it is causing serious economic or environmental harm based on inadequate domestic supply, the EPA will abandon the target. You can also.
Gasoline used in cars and trucks fell to 8 million barrels per day last year, down 14% from 2019, the lowest consumption since 1997, according to the Energy Information Agency. Gas is reduced because ethanol is mixed in the country’s gasoline supply. The use has reduced the demand for ethanol.
The 2020 target is well below the 30 billion gallons mandated by Congress in 2020 when the ethanol law was significantly expanded nearly 15 years ago. Since 2013, the EPA has not met the requirements for ethanol content under the 2007 law.
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Pitt reported from Des Moines, Iowa.
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