Industry responds to new RFS volumes

by Erica Shaffer
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WASHINGTON – The US Environmental Protection Agency can’t fix a broken renewable fuel standard (RFS) rule, and consumers and food producers will be the ones to pay. That was the general reaction of stakeholders in the meat and poultry industry following the EPA’s release of its final volume requirements under the RFS rule.

The final 2016 standard for cellulosic biofuel is nearly 200 million gallons, or seven times more than the market produced in 2014. The final 2016 standard for advanced biofuel is nearly 1 billion gallons, or 35 percent higher than the actual 2014 volumes; the total renewable standard requires growth from 2014 to 2016 of more than 1.8 billion gallons of biofuel, which is 11 percent higher than 2014 actual volumes. Biodiesel standards rise steadily over the next several years to reach 2 billion gallons by 2017. 

Janet McCabe, Environmental Protection Agency
Janet McCabe, acting assistant administrator for EPA’s Office of Air and Radiation

“The biofuel industry is an incredible American success story, and the RFS program has been an important driver of that success — cutting carbon pollution, reducing our dependence on foreign oil, and sparking rural economic development,” Janet McCabe, the acting assistant administrator for EPA’s Office of Air and Radiation, said in a statement. “With today’s final rule, and as Congress intended, EPA is establishing volumes that go beyond historic levels and grow the amount of biofuel in the market over time. Our standards provide for ambitious, achievable growth.”

But the new standards are a blow to consumers and chicken producers, the National Chicken Council said. The higher volume requirements will effectively raise food and fuel prices.

“By increasing the mandated volume of ethanol beyond the blendwall for next year, and retroactively increasing the mandates for 2014 and 2015, more corn from feed and food will be diverted into fuel production, resulting in increased costs for poultry and livestock producers,” Mike Brown, president of NCC said in a statement. “Since the RFS was enacted, chicken producers alone have incurred more than $50 billion in higher actual feed costs due to the ethanol mandates, and the tab keeps getting run up under this broken law.”

Brown added that the new mandate does not account for US exports of ethanol. He said exports divert additional corn away from the domestic food and feed markets. NCC estimates that, combined, 2014 and 2015 ethanol exports are likely to divert the equivalent of an additional 600 million bushels of corn away from feed and food markets. This is in addition to corn mandated for use under the RFS.

The National Council of Chain Restaurants accused the EPA of bowing to political pressure from the ethanol industry while ignoring “widespread harm” caused by the RFS. 

Rob Green, National Council of Chain Restaurants
Rob Green, executive director, National Council of Chain Restaurants

“The EPA has chosen to please a small group of ethanol lobbyists to the detriment of the nation’s small business restaurants and everyone who depends on the food chain across the country, Rob Green, executive director, said in a news release. “The EPA’s failure demonstrates the need for Congress — who created this mess — to quickly pass legislation to eliminate the corn ethanol mandate and take the RFS off the menu.”

But some in the ethanol camp aren’t happy with the EPA’s volume requirements, either, because the requirements fall below statutory targets set by Congress.

“EPA’s decision today turns our nation’s most successful energy policy on its head,” said Bob Dineen, president and CEO of the Renewable Fuels Association (RFA). “When EPA released its proposed RFS rule in May, the Association claimed it was attempting to get the program back on track. Today’s decision, however, fails to do that. It will deepen uncertainty in the marketplace and thus chill investment in second-generation biofuels.

Dineen argued that the ethanol industry does not receive tax subsidies such as those granted to petroleum companies. 

Bob Dineen, Renewable Fuels Association
Bob Dineen, president and CEO of the Renewable Fuels Association

“…the RFS is our only means of accessing a marketplace that is overwhelmingly and unfairly dominated by the petroleum industry,” Dineen said. “Today’s decision will severely cripple the program’s ability to incentivize infrastructure investments that are crucial to break through the so-called blend wall and create a larger market for all biofuels.”

The EPA understated the market for E85 and non-ethanol conventional biofuels in 2016 by at least 440 million gallons, Dineen argued. Approximately 2 billion surplus RIN credits already are available for refiners to use for compliance in 2016, with another 900 million RINs potentially becoming available from 2015 over-compliance. Dineen said, the EPA’s decision to lower the 2016 volume requirements below the 15 billion gallons stated in the rule “is simply unnecessary.”

“This final rule directly contravenes the statute and places the potential growth for biofuels like ethanol in the hands of the oil companies,” Dineen continued. “It will have the unfortunate consequence of increasing Big Oil’s ability to thwart consumer choice at the pump without even a scintilla of fear that EPA will enforce the statute. With no consequences for Big Oil’s bad behavior, consumers will be denied greater access to the lowest cost liquid transportation fuel and number one source of octane on the planet.”

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