Ethanol futures had a massive loss in two months after the Trump administration took steps to implement a deal. The deal in meant to ensure biofuel quotas are not weakening oil refineries. Also, they do not include them in requirements to use ethanol and biodiesel.
The proposal caused ethanol futures in Chicago to fall as much as 4.1% as some biofuel partners turned down the plan. It fell short of what administration officials guaranteed earlier this month and would not help quotas as much as hoped.
The Environmental Protection Energy suggested changes in the way it sets annual percentages. The proposal is pointing out how much renewable fuel refiners must blend into gasoline and diesel. Also, the agency is needing public comment on a plan to project some number of exemptions based on the most recent. Then, they will use that to adjust their calculations.
Renewable Fuel Standard statute is seeking to balance its goal by the proposal. Besides, the agency said it is maximizing the use of renewables while following the law. The sound process also provides relief to small refineries that demonstrate the need.
Biofuel advocates said the plan was different from what they know. The Lowa Corn Growers Association said it was “outraged” by the project since it does not account for previously waived gallons.
Renewable Fuels Association’s head says it falls short of delivering on President Trump’s promise to restore integrity to the Renewable Fuel Standard. Also, it leaves farmers, ethanol producers, and consumers with more questions than answers. the head called the proposal a “step backward.” He added that the plan sets the three-year average of exempted volume using the same DOE suggestions that EPA ignored several times.
Ethanol Futures on EPA Offsetting Waiver
The Department of Energy recommendations relies on refineries merited relief, rather than the EPA decisions on the waivers. The exemptions could still undermine quotas in the future, according to biofuel allies.
Refineries who do not meet the targets individually can still satisfy them through tradeable credits. It is known as Renewable Identification Numbers, which generated when biofuel blended into gasoline and diesel. Besides, EPA is not seeking to change proposed renewable fuel targets for 2020 and 2021 as part of the notice it is releasing. The agency instead proposed adjustments to the way it sets annual percentage requirements. The requirements used to calculate how many gallons of renewable fuel individual refiners and importers must blend.
Furthermore, the EPA said it intends to grant some refineries only limited exemptions in the future, a change from current practice.
The EPA already promised to cancel refinery exemptions. This is to relieve ethanol advocates, farmers, and Midwest politicians angry over the waivers. Although U.S. law enables waivers for small refineries seeking an economic hardship and federal courts, have rapped the EPA for denying some relief. Also, the number of exemptions has climbed under the Trump administration.
The changes are meaning to cover up for future refinery exemptions. Biofuel and agricultural trade groups slammed the approach. The group hoped to disclose past waivers, despite praise from industry trade groups and Midwest U.S. lawmakers,
Moreover, oil industry groups have already signaled to go to court to fight the new quota plan. It could effectively force larger, non-exempted refineries to blend more biofuels to refund for small refineries.
The agency is pledging to finalize the measure later this year, following a public hearing on the proposal on Oct. 30.
- Trading Instrument