EPA Decides Not to Suspend Renewable Fuel Standard in the Wake of Drought Impacts

On November 16, the EPA announced that it would not grant the request from several state governors to waive the Renewable Fuel Standard (RFS) to prevent further harm to grain-intensive industries in their states in the wake of this summer’s intense heat wave and drought.

"We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers," said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. "But our extensive analysis makes clear that Congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact." In a press release , the EPA said it did not find evidence "to support a finding of severe "economic harm" that would warrant granting a waiver of the Renewable Fuels Standard."

For background on the governors’ requests to waive the RFS, see this previous SBFF post from September 21, " Should the Renewable Fuel Standard Be Waived? EPA Extends Comment Period ."

In comments submitted to the EPA on October 10, EESI Executive Director Carol Werner observed: "It is unlikely that waiving the RFS would significantly reduce the harm caused by the heat wave and drought to livestock and poultry producers and consumers over the next twelve months, but a waiver would be likely to compound and spread additional harm to other states and sectors of the national economy. Of greatest concern is that it may deter needed investment and delay infrastructure development in more environmentally sustainable, climate-friendly advanced biofuels." To read EESI’s complete comments, click here .

To review all public comments to EPA on this issue, click here .

In the meantime, ethanol markets and demand for corn from the ethanol industry appear to be adjusting downward without a waiver. Many ethanol plants have been closed, as reported in this recent article from Bloomberg. According to the Energy Information Administration, ethanol production has declined more than ten percent below the same period a year ago. Ethanol stocks and exports are also declining, and ethanol imports are up. All of these factors have reduced demand for corn from the ethanol industry significantly and have contributed in part to the drop in corn prices below $7.50 per bushel in November from August highs of more than $8.50. This price is still too high for many, but it is much better than it was. Markets are now waiting to see how the corn crop does in the Southern Hemisphere, where harvest begins early next year.