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EPA Administrator Faces Pressure from Competing Interests over Waivers

06/02/2020

At a recent Senate Environment and Public Works Committee, EPA Administrator Andrew Wheeler stated “We are looking to see what relief we can provide everyone.” Both ethanol producers and petroleum refiners are under pressure given the profound drop in consumption of fuels as a result of COVID-19 restrictions. During April, ethanol production fell to a volume in the low 20 million gallons per day range, although there was a rise through mid-May to 27 million gallons per day compared to a regular 40 gallons per day.

Senators representing oil-producing states have petitioned the EPA for waivers covering the renewable fuel standard that can be allowed if severe economic conditions exist, such as at the present time. Naturally corn-state senators are opposed to waivers and in addition are considering legislation to support the ethanol industry that is operating at approximately 60 percent of capacity.

Oil Refinery

The House passed a Coronavirus Bill in mid-May allowing payment to ethanol producers forced to shut plants for at least one month during the first quarter. These plants would qualify for a payment of 45 cents per gallon based on half of the volume they produced during the corresponding month of 2019. In terms of a bill filed jointly by Senators Chuck Grassley [R-IA.] and Amy Klobuchar [D-MN,], the USDA would reimburse biofuel producers for 70 percent of their outlay on feedstock with corn in the case of ethanol and soybean oil for biodiesel.

The sharp drop in demand for gasoline obviously impacts ethanol producers and indirectly corn growers. The present situation obviously highlights the fact that biofuels are nonviable without mandates and federal support. It is instructive to remember that initiation of biofuels, almost two decades ago, was based on the need to be independent of foreign supplies of energy. Since this time, the U.S. has achieved more than parity through additional domestic supplies of natural gas and oil. The biofuels program converting food to fuel is an anachronism and now serves as an indirect tax on all who eat and drive.

Ethanol Plant