Recent court decisions 'bumps in the road' for US ethanol: RFA CEO

Despite recent blows in the form of court decisions, the US ethanol market is in a strong position for the coming years, said Renewable Fuels Association CEO Geoff Cooper July 14.

"When it rains it pours, the past few weeks it feels like we've had our share," Cooper said during the keynote address at the Fuel Ethanol Workshop in Des Moines, Iowa. "These decisions are temporary setbacks; they are bumps in the road."

The US Supreme Court in June sided with refiners in interpreting the Renewable Fuel Standard's language around small refinery exemptions to mean a refinery can apply for an exemption at any time.

The decision was seen as a blow to the biofuels industry and a win for refiners, as was a subsequent appeals court decision overturning an Environmental Protection Agency ruling that allowed the sale of E15 during the summer months.

Though the decisions have loomed over the ethanol industry in recent weeks, Cooper said hope remains for persistent ethanol demand.

"The courts have had their say but now it's up to the Biden administration to make their move," he said.

While the Supreme Court overturned part of a lower court decision and allows refineries to apply for exemptions at any time, provisions that could limit the number of exemptions were untouched.

"We believe the era of massive small refinery exemptions is over," Cooper said.

The EPA said in an early 2021 statement that refineries petitioning for a small refinery exemption must prove that they suffered disproportionate economic hardship from complying with biofuel mandates, not another external factor. Refineries must also prove they could not pass those costs to consumers, like fuel taxes.

A three-judge panel of the US Court of Appeals for the District of Columbia vacated the EPA's approval of year-round E15 fuel sales.

Cooper said the decision represents a challenge, not just for the ethanol industry but also for the oil industry.

"We think the oil industry really shot themselves in the foot," he said. "We think it will come back to haunt them."

Renewable Identification Numbers have surged in recent months, leaving many refiners looking for relief. S&P Global Platts assessed current-year D6 (ethanol) RINs at $1.48/RIN July 13, up from 46 cents/RIN on July 13, 2020.

Cooper argued that E15 allows more RINs to get into the market thanks to higher ethanol blending and the oil industry could end up missing the RINs that E15 would have brought.

"If you were a lumber supplier, would you set fire to the forest?" he asked