Granting the waivers would be a “major blow,” the organization says
The American Soybean Association (ASA) is warning that granting renewable fuel exemptions could be devastating.
“These requests, if acted on, would strike a major blow to domestic U.S. soybean markets and rural economies more broadly,” the organization said in a Nov. 10 statement.
The requests the organization speaks of came from a coalition of five governors.
Louisiana Governor Jeff Landry and Alabama Governor Kay Ivey petitioned Environmental Protection Agency Administrator Lee Zeldin on Nov. 9 to grant waivers from renewable fuel blending obligations in 2027, arguing the Renewable Fuel Standard (RFS) increases fuel costs.
The EPA has set the renewable fuel requirement for next year at 25.98 billion RINs. One RIN equals one ethanol-equivalent gallon of renewable fuel.
“The RFS imposes a cost on every gallon of gasoline and diesel sold in our states,” the petition says. “That cost is separate from, and in addition to, the price of crude oil. These increased compliance costs are ultimately passed through to consumers.”
The governors of Texas, Arkansas, and Mississippi, also support the request.
Previous government data indicates the RFS may contribute to higher prices at the pump.
“The standard was associated with modest gas price increases in areas outside of the Midwest. Most corn ethanol—the most common U.S. biofuel—is produced in the Midwest, so other regions had to pay for shipping and storage,” a June 2019 report from the Government Accountability Office says.
The Renewable Fuels Association (RFA) views the petition as a cop out.
Geopolitical issues are the main cause of higher gas prices but the governors are trying to place blame elsewhere, RFA President and CEO Geoff Cooper said.
“Their request instead seeks to make America’s renewable fuel producers and farmers bear the consequences of disruptions in global petroleum markets that the RFS did not create,” he wrote in a Nov. 13 letter to Administrator Zeldin. “These disruptions, including turbulence in the Strait of Hormuz, have driven increases in consumer prices for both gasoline and diesel around the world and have nothing to do with the RFS.”
The ASA wants to see full RFS compliance in 2027.
A complete commitment to ethanol and biofuels has ripple effects throughout the industry and rural communities.
“As a result of the current RFS volume obligations, domestic demand for U.S. soybeans has surged, biofuel production is booming, and soybean processors are investing billions of dollars here in the United States to increase capacity through plant expansions and new construction,” the organization says. “This growth in domestic soybean processing creates jobs, improves local on-farm basis for farmers, and lowers the cost of soybean meal used by livestock producers as demand for soybean oil increases availability.”