Home 5 Ag Stories Corn growers stand strong against changes to RFS

Corn growers stand strong against changes to RFS

Photo by Ben Nuelle

The big buzz at Commodity Classic 2018 was the potential for the Trump Administration to change the accounting system by which ethanol is blended into gasoline.

Ethanol producers are the “little guys” in this process, but have been shielded by the federal government through the Renewable Fuel Standard (RFS) which requires 10% of the final gasoline product to be ethanol. This requires blending by refiners.

The oil industry has fought against giving up market share to ethanol from the beginning and continues to object the blending requirements.

The source of recent controversy is an accounting of blending through a system called Renewable Identification Numbers, or RINs.

Why is the RIN exercise necessary? The answer is found in what the Environmental Protection Agency (EPA) calls an “obligated party.” Typically, the obligated parties are petroleum companies. More specifically, an obligated party is any company which introduces finished gasoline into the retail marketplace.

The obligated party establishes its Renewable Volume Obligation (RVO) by taking the RFS percentage (7.76% in 2008) and multiplying that number times the total volume of gasoline produced or imported. The obligated party then submits its pro-rata share of gallon – RINs to EPA, in order to demonstrate compliance with its portion of the RFS.

The RIN, in essence, is a credit used as a method to keep score. If an obligated party blends more renewable fuel than its share, it generates excess RINs. These excess RINs can then be traded or sold to another company that finds it more economical to purchase RINs instead of blending ethanol or biodiesel.

Not controversial? Think again…

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Fred Yoder, past president of the National Corn Growers Association, spoke with me at Commodity Classic 2018. Yoder referred to a “deal” between the Trump Administration and petroleum industry, to end a hold on the nomination of Bill Northey in exchange for what corn growers feel was a reduction in the value of RINs or other means to diminish the value of a RIN.

A bankrupt refinery has been the poster child for the effort, claiming it is now broke because of the RFS and enforcement of the cost of RINS payable to the EPA.

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