The U.S. Environmental Protection Agency announced last week that it will not waive the Renewable Fuels Standard.
“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.”
Livestock groups, governors and congresspeople had requested EPA waive the RFS. The RFS requires 13.8 billion gallons of ethanol to be blended into gasoline in 2013, an amount that will use about 4.5 billion bushels of corn, according to USDA.
A coalition of livestock, poultry and dairy organization commented on the decision, stating that they are “extremely frustrated and discouraged that EPA chose to ignore the clear economic argument from tens of thousands of family farmers and livestock and poultry producers that the food-to-fuel policy is causing and will cause severe harm to regions in which those farmers and producers operation.”
Biofuels producers see things differently.
Jeff Lautt, CEO of POET, one of the world’s largest ethanol producers said, “Today’s decision means the Renewable Fuel Standard remains strong and stable policy, and our industry can move forward with greater confidence, continuing to invest in new technology to make biofuels production even more efficient and commercializing fuel production from cellulosic feedstocks such as crop residue and other plant material.”
National Farmers Union president Roger Johnson said, “We are pleased with EPA’s decision not to waive the Renewable Fuel Standard for this year. The RFS has helped reduce our dependence on foreign oil from 60 percent in 2005 to 45 percent today and currently supports almost 500,000 American jobs and generates $53 billion in economic activity each year.”
“The National Corn Growers Association supports the Environmental Protection Agency’s decision to deny the Renewable Fuel Standard waiver request,” said NCGA president Pam Johnson. “We believe Administrator Jackson appropriately recognized petitioners did not properly prove severe nationwide economic harm had occurred thereby creating no justification for a waiver of the RFS.”
The EPA said its decision was based on economic analysis and modeling done in conjunction with the U.S. Department of Agriculture and U.S. Department of Energy.
Economic analysis of impacts in the agricultural sector, conducted with USDA, showed that on average waiving the mandate would only reduce corn prices by approximately 1 percent. Economic analysis of impacts in the energy sector, conducted with DOE, showed that waiving the mandate would not impact household energy costs. EPA found that the evidence and information failed to support a determination that implementation of the RFS mandate during the 2012-2013 time period would severely harm the economy of a state, a region, or the United States, the standard established by Congress in the Energy Policy Act of 2005.
The act required EPA to implement a renewable fuels standard to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel. A waiver of the mandate requires EPA, working with USDA and DOE, to make a finding of “severe economic harm” from the RFS mandate itself.
This is the second time that EPA has considered an RFS waiver request. In both cases, analysis concluded that that the mandate did not impose severe harm. In 2008, the state of Texas was denied a waiver.