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AFBF analysis: EPA’s fix does little to restore demand destruction

An American Farm Bureau economist says agriculture’s concerns with the EPA’s biofuels proposal are legitimate.

Michael Nepveux has conducted an analysis of EPA’s plan to reallocate gallons lost to Small Refinery Exemptions (SREs). He concludes that by using exemptions recommended by the Department of Energy instead of actual exemptions, “this fix does little to restore the demand destruction caused by SREs and further undermines the RFS”.

Nepveux says many in the ag industry feel the EPA’s supplemental notice “was equivalent to a bait and switch and does not live up to the promises made in the administration’s initial announcement”.

It’s important that farmers and others submit comments on the proposal, Nepveux says.

“Following the public comment period, EPA will issue updated standards for 2020 and 2021 RVOs—one that many in the biofuels and agriculture industry, including corn-state lawmakers, hope will revert back to original balanced approach to account for SREs by fully capturing historical SREs granted,” he says.

Brownfield visited with Farm Bureau’s Nepveux about his analysis (see below).

Meanwhile, EPA administrator Andrew Wheeler is trying to reassure ag and biofuels groups. In an interview with Nexstar Media, Wheeler said even though the proposal was “not exactly” what those groups were expecting, it will still meet 15-billion gallon threshold for ethanol for next year.