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Get the EPA Out of the Way of American Exporters

EPA exporters AmericanWhen Americans think of exporting goods, they rarely, if ever, think of ethanol. But America has a growing ethanol export industry being constrained by the Environmental Protection Agency(EPA). A few minor changes to rules within the EPA can create a substantial increase in ethanol exports, which means more work for everyone in the value chain for ethanol from the farmer to tanker. Creating more demand for your product makes economic sense.

The Renewable Fuel Standard (RFS) is a federal program that requires transportation fuel to contain a minimum amount of renewable fuels. The program originated in the Energy Policy Act of 2005, H.R. 6. The RFS was later amended with the passage of the Energy Independence and Security Act of 2007, H.R.6. The statute required the U.S. to use four billion gallons of renewable fuel starting in 2006 reaching thirty-six billion gallons in 2022.

In the current system, Renewable Identification Numbers (RINs) are generated for each denatured gallon of ethanol produced in the U.S. When the biofuel is exported the RINs are retired, satisfying the Renewable Volume Obligation (RVO). It is important to remember, the RINs themselves have value, and are traded like commodities.

Blending ethanol domestically results in RIN value that encourages increased ethanol production and use. The majority of export gallons are never assigned a RIN. The export gallons that are assigned RINs also receive a matching RVO, thus creating a disincentive for exporting ethanol relative to domestic blending of both US-produced ethanol and imported ethanol.

The President and the EPA can make two minor changes to EPA rules to increase the amount of ethanol exported, thereby increasing overall U.S. exports.

  1. Revise “ethanol” within the definition of “Renewable Fuel” to include both denatured and undenatured gallons of ethanol intended for fuel use.
  2. Remove the export RVO on all gallons of exported ethanol intended for fuel use.  This change would also include accompanying changes to compliance and recordkeeping provisions for exports.

Ethanol can be denatured or undenatured for fuel use. If ethanol is denatured, it has been altered with additives to make it bad tasting, foul smelling or nauseating. Undenatured ethanol has none of the additives. For ethanol to qualify in the RFS, it must be denatured, under current EPA regulations. Because of the rule, only denatured ethanol get RINs. This presents a problem for many ethanol exporters.

Many markets outside the United States, such as Brazil and India, specifically require ethanol to be undenatured. In 2016 the U.S. exported 1.05 billion gallons of ethanol to more than 50 countries, with more than fifty percent of exports going to Canada and Brazil.

Because markets move quickly, and governments move slowly, it is in everyone’s best interest if the EPA definition of ethanol included both denatured and undenatured. Updating this would align the definition of ethanol with the present day global market realities, which demand both undenatured and denatured ethanol for fuel use. It would also allow refiners and exporters to rapidly adapt to unfolding events such as natural disasters or political instability.

Removing the RVO on exported volumes would remove a self-imposed non-tariff barrier to trade in ethanol and enhance U.S. energy security by enabling a U.S.-produced energy source to meet global demands. Ethanol would join liquid natural gas and crude oil as part of a new era in U.S. energy dominance.

As ethanol exports rise, U.S. ethanol producers can increase production despite challenges in the domestic market. Increased production means more shifts for plant workers, more farm equipment purchased, and more loads for truck drivers. All high paying jobs that expand the tax base.

Ethanol producers would also benefit from holding separated RINs from ethanol exports that they can sell to obligated parties for compliance. This change would also benefit obligated parties by increasing liquidity and ameliorating the potential for RINs price spikes that threaten domestic refining.

President Trump has made narrowing the trade deficit a mission of his administration. These two small rule changes could significantly increase U.S. exports while creating jobs. The rule changes would give U.S. exporters the chance to compete on the international stage. The EPA needs to make the rule changes and get out of the way of American ethanol exporters.

From - NetRightDaily.com - by Printus LeBlanc

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PaulE

There is a third option not mentioned. Since ethanol is actually less energy efficient that straight gasoline and does nothing to significantly lower total emissions when one includes its production process for ethanol in the total numbers, why not simply advocate for the end to this defacto tax on the American consumer by repealing ethanol’s mandated use in domestic gasoline. Correct the initial error. Don’t try to create a more convoluted, bureaucratic set of criteria for people to jump through, simply because that is how Washington normally operates. Think like a businessman concerned for his customers, not a politician only concerned with re-election. The Iowa farmers would then be free to still produce all the ethanol they want, but they could sell all of it for export only. No more forcing the American consumer to buy this stuff, which is so corrosive that it requires it be shipped via tanker… Read more »

carl

There are better ways to make ethanol without burning food. Switch grass would be much more efficient. And yes ethanol does destroy small engines and it reduces mpg on automobiles. So a loose loose government program. The middle class suffers again.

john boy

You city folk may not know the damage this additive does to small engines [with carbs] it eats the metal up in side..very costly to small business…bov wanted to increase % to 20% and the car co said they would not warranty engines..what does that tell ya???

LittleMoPeep

This complaint really doesn’t address the real issue: corn subsidies for ethanol production. The fact that Ted Cruz
opposes corn subsidies should tell us something…few have the guts to do so. The corn lobby in this country
doesn’t need more help. Corn is a poor source for ethanol, compared to other materials. Why continue this
wasteful use of farm land all the while enabling the corrupt, wasteful and expensive corn lobby?

Elton Yancey

I have always thought it was stupid to use a food crop for a fuel.I’m sure many people around the world would love to have some of this corn to eat.

John Degges

Enact an law that voids the law that demands that engines be destroyed by the fuel used in them and, even worse, reduces the amount of corn available for food.

Fred

Its great that AMAC is providing this insight. The key question however, is how to get visibility of this to the White House to actually make the change.

Rick

Get the EPA out of the way of exporters? How about just get the ethanol out of gasoline – period! It’s inefficient, wastes water, uses corn that could be better used as food, and on and on and on! The only people getting any good out of ethanol are corn farmers and corporations – we could do without those kinds of corporations, and farmers can go back to growing corn for food!

Tman

Undenatured ethanol is basically 200 proof vodka.