Administration Makes Two Big Moves on Biofuel

WASHINGTON — The Biden administration made two significant moves aimed at supporting the biofuel industry.

The first of these moves came from the U.S. Department of Agriculture, which announced on Friday that it will provide $700 million to help lower costs and support biofuel producers who suffered significant, unexpected costs as a result of the coronavirus pandemic.

The funds are being made available through the Biofuel Producer Program, which was created as part of the Coronavirus Aid, Relief, and Economic Security Act.

The investments include more than $486 million for 62 producers located in what the department called “socially vulnerable communities.”

“The investments we’re announcing today will pave the way to economic recovery for America’s biofuel producers, stimulate a critical market for U.S. farmers and ranchers, and support our nation’s transition to a clean-energy economy,” said Agriculture Secretary Tom Vilsack.

USDA is making payments to 195 biofuel production facilities to support the maintenance and viability of a significant market for agricultural producers of products such as corn, soybean or biomass that supply biofuel production.

These biofuel producers experienced unexpected market losses on a combined 3.7 billion gallons as a result of COVID–19, the department said.

Among those receiving payments are Southwest Renewable Energy in Council Bluffs, Iowa, which is receiving a payment of $3 million. It suffered a market loss on 14.3 million gallons of ethanol due to the pandemic.

Adkins Energy, of Lena, Illinois, is receiving a $774,000 payment. Its biomass-based diesel production suffered a market loss on almost 3.5 million gallons due to the pandemic, and White Energy Holding Company, of Frisco, Texas, which is receiving a $21 million payment for production at two facilities. Its ethanol production suffered a market loss on 98 million gallons due to the pandemic.

Blending Standard

In related news, the Environmental Protection Agency has set its requirement for how much ethanol and biodiesel the oil industry must blend into the nation’s fuel supply this year.

EPA took action Friday pursuant to a consent decree agreement that requires EPA to finalize RFS volumes for 2021 and 2022 no later than June 3, 2022.

Together with the USDA’s announcement, the EPA’s actions are expected to reduce the nation’s dependence on oil and diversify the U.S. fuel supply by increasing production of domestically produced biofuels.

EPA adjusted the final biofuel volumes for 2021 to reflect updated data on actual 2021 ethanol use that has become available since the proposal was issued.

A summary of the final volume requirements for 2020-2022 are included in the accompanying chart.

In a second action, the EPA denied 69 pending small refinery exemption petitions. The 69 denied petitions span renewable fuel standard compliance years 2016 through 2021.

The agency said the denials are consistent with a decision issued in April denying 36 SRE petitions for compliance year 2018.

According to a written statement released by the EPA, the small refinery exemption denials are consistent with a 10th U.S. Circuit Court of Appeals ruling in Renewable Fuels Association et al. v. EPA.

In that ruling, the court said small refinery exemptions may only be granted when a small refinery’s hardship is caused by compliance with the renewable fuel standard program.

In addition to finalizing the volume requirements, the rule also finalizes a regulatory framework to allow “biointermediates” to be included in the RFS program, while ensuring environmental and programmatic safeguards are in place.

Biointermediates are feedstocks that have been partially converted at one facility but are then processed into an RFS-qualified biofuel at a separate facility. Providing a way for producers to utilize biointermediates may reduce biofuel production costs and expand opportunities for more cost-effective biomass-based diesel, advanced, and cellulosic biofuels.

This new regulatory framework will allow new facilities looking to make advanced, innovative biofuels to qualify under the RFS program, expanding access to the program for biofuel producers and increasing compliance flexibility.

The renewable fuels industry says gas blended with 15% ethanol, called E15, can cut pump prices by nearly 60 cents a gallon in some parts of the country. Biden visited an Iowa ethanol plant in April to announce he was lifting disputed restrictions on the summer sales of E15 to help cut gas prices

“Biden understands the important role the biofuels industry plays in supporting Iowa farmers and rural communities while reducing the price at the pump for consumers,” Rep. Cindy Axne, D-Iowa, and co-chair of the House Biofuels Caucus, said in a written statement hailing the much anticipated announcement on the Renewable Fuels Standard.

But Sen. Chuck Grassley, R-Iowa, said that taken together, the multiple actions taken by the EPA Friday were a mixed blessing.

While he applauded the agency’s rejection of the small refinery exemptions in a Twitter post, calling it a “commonsense move,” he said the EPA effectively “went back in time to lower biofuel blend levels in 2020.”

This, he said, “creates uncertainty” for the biofuels sector.

“If [the] Biden administration wants to lower gas prices, we need to use more homegrown biofuels,” Grassley said.

Iowa is both the nation’s largest ethanol producer and corn grower, with about half the crop going to make renewable fuel.

It also leads the nation in making biodiesel and is the second-largest grower of soybeans, a major feedstock for the fuel.

“By requiring petroleum refiners to blend larger volumes of low-cost biofuels like ethanol, today’s actions will put downward pressure on gas prices and provide economic relief to American families facing record-high pump prices,” Renewable Fuels Association CEO Geoff Cooper said in a statement.

Dan can be reached at [email protected] and at https://twitter.com/DanMcCue.