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Ethanol Producers Wait for Lifeline
By Todd Neeley
Thursday, July 30, 2020 2:14PM CDT

OMAHA (DTN) -- With ethanol producers continuing to struggle and fuel demand sliding during the COVID-19 pandemic, biofuels producers and Midwest lawmakers have been waiting for a lifeline.

The EPA has surpassed the deadline by one month to release proposed 2021 renewable volume obligations in the Renewable Fuel Standard, an important market driver for biofuels.

And while congressional leaders continue to hammer out details on a new round of COVID-19 stimulus that may include relief for ethanol producers this time, President Donald Trump was in west Texas on Wednesday touting the oil industry on a fundraising stop.

The Senate version of pandemic relief gives USDA discretion to make direct payments totaling $20 billion to agriculture including "agricultural processors." The language is broad and would leave it up to USDA to determine who would qualify for aid.

"It isn't clear how or whether ethanol producers would benefit from the inclusion of 'agricultural processors' in the Senate bill's agriculture relief provisions," Renewable Fuels Association Chief Executive Officer Geoff Cooper told DTN.

Cooper said final legislation needs to include specific direction on how the money is spent.

"What is clear is that USDA is seeking unambiguous direction from Congress with regard to distributing assistance for ethanol producers," he said.

"It is vitally important that the final package includes -- as the HEROES Act did -- an explicit provision specifically for renewable fuels. There is still time to make sure that happens."

As of July 24, there were 44 plants running at a reduced rate and 33 were fully idled, including 20 alone since March 1. RFA states 127 out of 204 ethanol plants are running at full capacity.

At the peak of the COVID-19 crisis in late April, more than 52% of ethanol capacity was idled and only 46 plants were running at full capacity, with 78 completely idled.

"With ethanol producers struggling to recover from coronavirus-related market disruptions, it is imperative that any new aid package include specific emergency relief for the renewable fuels industry," Cooper said.

"Ethanol plants across the country have seen their markets totally destroyed by the pandemic, and many are hanging on by their fingernails."

The House-passed HEROES Act would establish the Renewable Fuel Reimbursement Program. It would provide a 45-cent per-gallon payment for feedstock purchases made by biofuels producers from Jan. 1, 2020, through May 1, 2020.

RVO DEADLINE MISSED

EPA also has missed the June 30, 2020, deadline for issuing an RVO proposal for 2021. EPA is still trying to figure out how to follow a court ruling from last January.

The U.S. Court of Appeals for the 10th Circuit in Denver ruled EPA didn't have the authority to issue small-refinery exemption (SRE) extensions to three companies that were not originally granted waivers in 2017 and 2018.

The EPA has pending 86 total requests for SREs, including 58 requests for retroactive exemptions for 2011 to 2018.

The refining companies in the case have until Sept. 6 to file an appeal to the Supreme Court, after the Trump administration decided not to file an appeal and the full 10th Circuit denied a refiner request for a hearing before the full circuit.

EPA did not respond to DTN's request for information on the timing of an RVO proposal's release.

"EPA's handling of SREs moving forward is completely intertwined with the annual RVO rules and EPA hasn't made its mind up yet on what it will do with SREs and the 10th Circuit decision," Cooper said.

"We think this is the reason for the delay. They apparently want to wait to see if the refiners will appeal the 10th Circuit decision to the Supreme Court and then wait to see whether the court will review the decision. So, it could be well after the election before we see the 2021 RVO rule."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN


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