EPA Proposal Reallocates Far Less Waived Ethanol Blend Volume Than Promised to Renewable Fuels Industry Groups

The U.S. EPA’s proposal to reallocate ethanol blend gallons lost over the past three years due to 31 small refinery blending exemptions issued by the agency, is falling far short of the renewable fuels industry’s expectations. Instead of reallocating the entire volume of waived ethanol gallons, the EPA is proposing to reallocate volume based on a three-year average to increase the percentage blend rate refiners must achieve in 2020.

EPA plans to base the three-year average not on actual volumes waived under the small refinery exemptions, but on volume recommended by the Department of Energy (DOE). The sum of DOE recommended volumes is far below the actual volumes waived. The DOE, which provides an initial review of small refinery exemption requests, most recently recommended granting waivers for only 770 million gallons. The EPA, however, approved waivers for 1.4 billion gallons during its last round of exemptions.

The EPA proposal is good news for petroleum marketers because it reduces the likelihood of the retail market being flooded with E15 volumes that far exceed consumer demand. Renewable fuel groups are accusing the Trump Administration of reneging on an agreement reached with the White House earlier this month. Since taking office, the Trump Administration has granted 85 waivers to small refineries, freeing them from using 4 billion gallons of renewable fuel. The EPA’s proposed rule will be finalized later this year, after annual RFS mandates are set for 2020.