Ethanol is big business in North Dakota. In fact, the industry produces around 520 million gallons per year within the state. A recent decision by President Trump’s EPA has bolstered confidence within the industry. But, interest groups are calling it an election year stunt by the President to strengthen support from rural America.
The Renewable Fuel Standard, or RFS, was created by the EPA in 2005 to increase the amount of renewable fuel, such as ethanol, that gets blended into the nation’s fuel supply. The goal of the RFS is to reduce U.S. reliance on foreign oil and cut carbon emissions. Each year that standard increases which means oil refineries are obligated to blend higher percentages of ethanol into their fuel every year. But, it hasn’t worked that way. Dating back to 2011, more than 70 oil companies have applied for Renewable Fuel Exemptions to avoid having to blend ethanol into their gas. They needed to prove economic hardship in order to gain an RFS exemption.
“What’s happened of late is these exemptions have been given without demonstration of hardship and they were handing them out essentially to anybody that applied,” Midwest Ag Energy CEO and ND Ethanol Council Chairman Jeff Zueger.
Because of the exemptions, billion gallons of ethanol have been deferred. However, in mid-September, the EPA announced that it is rejecting 54 RFS exemptions applications. The announcement sends a strong signal to North Dakota’s ethanol producers and corn growers that there will be a steady demand for their product.
“What’s happened of late is these exemptions have been given without demonstration of hardship and they were handing them out essentially to anybody that applied,” explained Zueger.
Because of the exemptions, billions of gallons of ethanol have been deferred. But, earlier this month the EPA announced that it is rejecting 54 RFS exemption-applications. The move sends a strong signal to North Dakota’s ethanol producers and corn growers that there will be a steady demand for their product.
“Anything that we can gain from the EPA that shows a strong signal for support for renewable fuels going forward, that they’re gonna continue to follow the intent of the Renewable Fuel Standard,” explained Zueger.
The EPA says the decision is in keeping with Trump’s promise to promote domestic biofuel production, support the nations farmers, and strengthen energy independence.
“This decision, really from an industry standpoint gives us the footing and the confidence that now we’re gonna comply with the RFS and our industry can look forward instead of backwards,” explained Red Trail Energy CEO, Gerald Bachmeier.
But, critics say it’s a political stunt during a hotly contested election year. The Trump administration signaled that it wanted to use USDA funds to make $300 million dollars in payments to the oil companies whose petitions had been denied. That money that is designated for farmers and not the fossil fuel industry.
“And, I know Sonny Perdue from what I have heard was not in favor of this. There are definitely optics problems which you note. This is a fund of money that is designed to pay farmers, agricultural producers, for when they have tough times like they’re having right now, and you know, I think there’s a lot of people that viewed using that money as not the proper move,” Growth Energy VP of Government Affairs, John Fuher.
Meanwhile, North Dakota’s ethanol producers are welcoming what they see as a win for their industry and for our state’s corn farmers.
“You may not like this administration or the President on how he delivers the message, but at the end of the day he’s actually getting some things done that have really taken down some barriers, especially for this state,” said Bachmeier.
US Ag Secretary Sonny Purdue says that money will not be used to bail out oil companies. Growth Energy’s John Fuher says the decision by the EPA to reject 54 gap-year small refinery exemptions is “positive movement,” but he says there are still 33 exemptions that still need to be rejected.
On average 40 to 60% of North Dakota’s corn crop goes toward ethanol, but this year refiners are expecting 70% of the state’s corn to be used for ethanol.