The Environmental Protection Agency’s (EPA) Aug. 9 announcement granting 31 of 38 requested Small Refinery Exemptions (SREs) was met with immediate and harsh criticism from players in the agriculture and the ethanol industry.
Unfortunately, dire predictions of the severe economic toll EPA’s decision would have in annually displacing 1.43 billion gallons of lost renewable fuels demand are quickly being realized for Michigan’s five ethanol processors and, ultimately, Michigan farmers.
Valero Energy’s Riga, a Michigan ethanol plant originally scheduled for a maintenance shut-down beginning in June, will remain closed indefinitely, on a month-to-month basis, according to Bruce Sutherland, president of Michigan Ag Commodities.
Valero purchased the Riga ethanol plant in November 2018 from Green Plains Inc. Sutherland said the facility currently isn’t posting any bids until the 2020 harvest.
Located between Riga and Blissfield about 30 miles south of Ann Arbor, the Riga plant annually processes 19 million bushels of corn into 55 million gallons of denatured ethanol and 145,000 tons of distillers’ grains co-products and employs approximately 50 full-time personnel.
Michigan corn producers will also be affected by Tuesday’s announcement from POET, which owns and operates POET’s Caro, Mich., ethanol plant. Located in Tuscola County, the facility produces 53 million gallons of ethanol annually consuming approximately 18 million bushels of corn.
POET, the world’s largest biofuels producer, announced it will idle ethanol production at its Cloverdale, Ind., plant due to the Trump Administration’s SREs decision. The process to idle the plant will take several weeks, after which the plant will cease processing of more than 30 million bushels of corn annually, with hundreds of local jobs being impacted.
Saying the company’s already reduced production at half of its 28 ethanol processing plants, POET Chairman and CEO Jeff Broin warned corn processing will drop by an additional 100 million bushels across Iowa, Ohio, Michigan, Indiana, Minnesota, South Dakota, and Missouri.
“Our industry invested billions of dollars based on the belief that oil could not restrict access to the market and EPA would stand behind the intent of the Renewable Fuel Standard,” Broin said. “Unfortunately, the oil industry is manipulating the EPA and is now using the RFS to destroy demand for biofuels, reducing the price of commodities and gutting rural economies in the process.”
Sutherland said ethanol processors are clearly not happy with EPA’s SRE decision, and he expects the overall production trends and ethanol demand will continue to suffer.
“Demand is under assault — unfortunately, it all appears to be self-inflicted,” he said, referring to the EPA announcement.
According to the Renewable Fuels Association (RFA), 15 ethanol plants have already shut down — three of them permanently — due in large part to the demand loss resulting from EPA’s SRE decision.
“Ethanol demand has fallen and prices have plummeted to their lowest values in more than a decade,” RFA President Geoff Cooper said. “When operating, those 15 plants bought nearly 300 million bushels of corn and supported more than 2,500 jobs in rural communities. Who will tell those workers and their families that the demands of Big Oil are more important to this administration than the livelihood of rural America?”
Cooper was livid with an EPA spokesperson’s assertion yesterday that there was “zero evidence” of demand destruction for ethanol due to the numerous small refinery exemptions.
“To suggest that there is ‘zero evidence’ of ethanol and corn demand destruction from small refinery waivers is as insulting as it is absurd,” Cooper said. “On the same day that EPA made this asinine assertion, two more ethanol plants announced they are idling production.”
Cooper said the waivers are eroding corn demand, with USDA cutting its estimate of corn use for ethanol by 225 million bushels — equivalent to erasing demand for the entire Michigan corn crop.
The RFS authorizes SREs for refiners that (1) process less than 75,000 barrels of petroleum a day and (2) demonstrate “disproportionate economic hardship.” Over the past two years, the EPA has issued waivers to refineries owned by ExxonMobil, Chevron, and other large oil companies — none of which are small and have economic hardship. According to Broin, EPA’s continued granting of SREs are wiping out any near-term growth potential for year-round E15 and challenging the president’s promises made to family farmers and rural communities.
According to Cooper, the EPA has cut biofuels demand by 4 billion gallons and reduced demand for corn by 1.4 billion bushels overall since it began granting the SRE waivers, causing severe damage in rural America.
The recent announcement of 31 new waivers comes in steep contrast to President Trump’s rollout of year-round E15 earlier this summer.
“My long term fear isn’t for the biofuels industry, it’s for rural America,” Broin said. “The EPA has robbed rural America, and it’s time for farmers across the Heartland to fight for their future.”