Ethanol industry claims victory as EPA hikes Renewable Fuel Standard volumes

After pushing back hard against the Environmental Protection Agency and appealing to President Trump to keep his campaign promise, the ethanol industry Thursday notched a major policy win by successfully fending off cuts to the federal biofuels mandate.

In a highly anticipated announcement, the EPA not only backed off plans to trim the Renewable Fuel Standard (RFS), but actually delivered unexpected increases to the program that requires ethanol to be blended with the nation’s gasoline supply.

The proposal was seen as a key test of whether Mr. Trump would follow through on his campaign vow to protect the ethanol sector or whether EPA Administrator Scott Pruitt — a longtime critic of the RFS — would take the administration in the opposite direction.

Mr. Pruitt’s preliminary plan, offered over the summer, would have rolled back the RFS.

But that plan was scrapped after an intense lobbying effort from the ethanol industry and its allies on Capitol Hill, including Republican Sen. Chuck Grassley of Iowa, who threatened to delay the confirmations of several key EPA nominees unless the agency changed course.

In the end, Mr. Pruitt did just that.

“Maintaining the Renewable Fuel Standard at current levels ensures stability in the marketplace and follows through with my commitment to meet the statutory deadlines and lead the agency by upholding the rule of law,” Mr. Pruitt said in a statement.

In its final rule, the agency said that 19.29 billion gallons of biofuels must be blended with gasoline supplies next year. Of that, about 15 billion gallons will come from conventional corn-based ethanol, while the other 4.29 billion gallons will come from advanced sources such as cellulosic biofuel.

The numbers represent a slight increase from the agency’s initial proposal over the summer. In July, Mr. Pruitt proposed blending a total of 19.24 billion gallons, and just 4.24 billion gallons of advances fuels. This year, 4.28 billion gallons of advanced biofuels were to be blended with gas supplies.

The EPA also formally scrapped a plan to let oil refiners off the hook for blending the fuel themselves — a change the industry deeply opposed, and one they argued would lead to dramatic decreases in the amount of ethanol produced.

While ethanol proponents wanted greater increases, and some biofuels leaders especially decried the final levels of cellulosic fuel, they still claimed victory Thursday in warding off major cuts.

“EPA appears to have absorbed the tens of thousands of comments from American ethanol producers, farmers, consumers, veterans, and others who suggested the proposed rule was unnecessarily pessimistic with regard to the total renewable fuel volumes, and cellulosic ethanol volumes specifically,” said Bob Dinneen, president and CEO of the Renewable Fuels Association, the ethanol industry’s largest trade group. “The final rule is a marked improvement, increasing both total renewable fuel and cellulosic biofuel volumes by 50 million gallons over the proposed levels.”

The RFS, signed into law by then-President George W. Bush in 2007, sets blending levels that increase each year. The actual quotas have routinely been far below the initial numbers envisioned by Congress a decade ago.

While Thursday’s proposal is largely a victory, some EPA critics say the agency missed the mark by not calling for much higher levels of advanced biofuels, a sector they say is primed for rapid growth with help from the federal government.

“Congress intended for the RFS to drive growth in biofuels across all categories. Contrary to that goal, this final rule does little to encourage investment and growth in advanced biofuels,” said Mr. Grassley, perhaps the loudest ethanol supporter in the Senate.

Still, even Mr. Grassley said the final rule is far superior than earlier offerings from Mr. Pruitt.

“I’m glad that EPA backed off [the initial] proposal, which would have represented an abandonment of President Trump’s stated commitment to biofuels and the integrity of the RFS,” he said.