Although November 30th is the deadline for the Environmental Protection Agency to release blending obligations for the following year, the Agency has historically failed to designate a specific volume in accordance with the statutory Renewable Fuel Standard.
Senator Chuck Grassley (R-IA) expressed the view that "This deadline is being missed and is very unfortunate for farmers and biofuel producers because they are facing uncertainty as to the volume levels that will be designated".
Rumors are circulating in the biofuels industry and in D.C. that the EPA is planning to reduce the RFS requirement. A high RFS is critical to maintaining an appropriately high volume of ethanol production and hence profitability for ethanol refiners. The higher the volume of ethanol produced the greater is the demand pressure on corn price. Unrealistically high prices are obviously to the detriment of the livestock industry that has expended billions in higher expenditure on corn since the introduction of corn-based ethanol. The corn price is critical to the agricultural economy of Iowa and hence the political standing of Senator Grassley who has represented his State in the Senate since 1981 and has announced for an 8th term in 2022.
In addressing the Renewable Fuels Standard, Secretary of Agriculture, Tom Vilsack, previously a Governor of Iowa assured the farming community that “The biofuels industry can expect certainty from the Administration and the EPA".
Since the E15 blend will not be allowed during the summer of 2022, there is concern that RFS must be sufficiently large to maintain current production of ethanol with refineries producing over one million barrels per day and operating at 80 percent of industry capacity. Sec. Vilsack noted that the previous Administration established an RFS with corresponding Renewable Volume Obligations but extended a large number of waivers to oil refiners. Sec. Vilsack believes that the Administrator of the EPA, Michael Regan, will determine and issue a number and will not provide waivers as in the past.
The RFS and related data will be updated in the December 15th edition of CHICK-NEWS