RFA Expects RFS Waiver to be Denied

Responding to plans by livestock and poultry groups to seek a waiver of the Renewable Fuel Standard, the head of the Renewable Fuels Association (RFA) expects the request to be denied.

“Given the flexibilities inherent to the RFS, and the fact that waiving the program would not result in any meaningful impacts on corn prices, we fully expect Administrator Jackson to deny any waiver request,” said Bob Dinneen, RFA president and CEO. “A dispassionate review of the facts can lead to only one conclusion: a waiver of the RFS would simply reward oil companies that have long sought to repeal this very important and successful program. The RFS has reduced our dependence on imported oil and saved consumers at the pump.”

RFA“This summer’s hot, dry weather conditions have caused significant challenges for all users of grain,” Dinneen said. “We understand the hardships facing the agriculture industry this summer are serious. From extremely poor pasture conditions to heat stress on animals to reduced crop yield potential, this summer’s circumstances have been difficult. However, waiving the RFS won’t bring the type of relief the livestock groups are seeking, nor will it result in significantly lower feed prices. In fact, because ethanol plants also produce a high protein feed, limiting ethanol production will only further complicate drought related feed issues and costs.”

“The marketplace is the most efficient mechanism to ration demand, not the government, and that is already happening,” Dinneen continued. Dinneen pointed out that the ethanol industry has already begun to respond to sharply higher corn prices by significantly reducing production. The industry’s consumption of corn last week was the lowest in over two years and down nearly 14% in just the last six weeks.

Still, despite the downturn in production and continued demand rationing by the ethanol industry, obligated parties (petroleum refiners and blenders) should have no problem meeting the RFS. The ability of obligated parties to “bank” excess Renewable Identification Number (RIN) credits and use them for compliance in the following year provides a significant measure of flexibility that takes pressure off of the corn market in the event of a short crop. It is estimated that some 2.4 to 2.6 billion excess renewable fuel RIN credits are currently available to obligated parties, equivalent to nearly 20 percent of this year’s RFS renewable fuel requirement.

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