Urgent Action - RFS
You have probably noticed that farm media and the DC beltway media have been abuzz for the past week or so with ethanol talk. President Trump and his team (Ag Secretary Perdue and EPA Administer Pruitt) have been meeting a lot about complicated, but critical, features of the RFS. The players are Senator Cruz (R-TX) an outspoken ethanol opponent, Senator Toomey (R-PA) a senator who is up for re-election in a battleground state, also notable is a refinery in PA is blaming the RFS for its bankruptcy a couple of months ago, and Senators Grassley (R-IA) and Ernst (R-IA), strong supporters of the RFS and ethanol.
The political football in this issue is a credit within the RFS called ”RINs" (Renewable Identification Numbers); see the information piece (What’s the Deal with RINs?!, below) to understand how they are important to farm income. And, that has been the focus of the White House talks over the past two weeks. Senator Cruz has proposed a price cap of 10 cents, presumably in exchange for regulatory relief on E15. See the links below for economic analyses by University of IL, Iowa State and Purdue University about what that deal would mean for corn prices.
The way to reduce the price of RINs is for refiners to blend more ethanol. Thus, we contend that the only necessary measure is to grant a waiver for RVP to E15. Doing so will place more ethanol in the supply chain, inserting more RINs into marketplace, which means lower RINs prices.
Your attention and action is vitally needed at this time:
Before a meeting in the White House on this issue, which is reported to occur on Monday, the White House needs to hear from you that you expect him to maintain his promise to the American Farmer about upholding the RFS. Senator Cruz’s proposal would take away 700 million gallons of ethanol demand and, according to Iowa State, impacting corn price by 25 cents. Farm income is at a 12-year low; University of Illinois predicts this affect would be ‘catastrophic’ for ethanol and biodiesel.
Any manipulation in the pricing of RINs, which is the compliance mechanism for the RFS, and we believe that Sen. Cruz’s objectives can be met simply with a fix to the RVP waiver for E15.
Manipulating the RINs pricing structure will dismantle the RFS.
Statements from Organizations Opposing RINs Cap Deal
Growth Energy: Statement on White House Meeting
American Coalition for Ethanol: ACE Thanks Members, Senators for Strong RFS Support
Articles & Resources
What's the Deal with RINs
Read this for a basic explanation of the purpose of RINs and how they impact farm income.
Information Alert - RFS
This was sent via email to all KyCorn members last week. It unpacks the chain of events, and more importantly explains how it is impossible to unequivocally support the RFS, and also support a cap on prices of RINs.
February 26 Letter to President
This letter was sent to the White house by National Corn, American Soybean, American Farm Bureau and others on February 26. It officially states the farm industry’s united opposition of artificial RINs price adjustment.
University of Illinois (2/28/18): The Grand Bargain? Trading an E15 RVP Waiver for a RINs Price Cap
University of Illinois evaluates the effect; “The picture that emerges from this analysis of a “grand bargain” over RFS is one where the impact of an RVP waiver for E15 would be vastly smaller than the impact of a 10 cent per gallon RINs price cap.”
Purdue (3/6/2018): Impacts of Options for Modifying the Renewable Fuel Standard
Purdue University believes that trading a RINs price cap for RVP waiver would be a net loss for ethanol: “Our conclusion is quite simple. Any of the options employing a RIN price cap would prevent achieving the objectives of the RFS. The year-round RVP waiver for E15 would do little to ameliorate the situation in the near term.”
Iowa State (3/2/2018): E15 and E85 Demand Under RIN Price Caps and an RVP Waiver
Iowa State’s Center for Agriculture and Rural Development weighs in on what a RINs Price X RVP Waiver deal would mean: “A cap on D6 RIN prices between $0.10/gal to $0.20/gal would likely reduce the effective ethanol mandate from 15 billion gallons to about $14.3 billion gallons in 2018. Unless increased ethanol exports compensate for the reduced mandate, corn prices would decrease under the proposals D6 price cap.”
Perdue Says He Stands With the RFS; Grassley Says Schooling Is Needed
Coverage of Secretary Perdue reiterating support for the RFS, but reportedly downplaying the fatal effect of a RINs cap on the RFS.
Year-Round E15 Sales Would Reduce Biofuel Credits Costs
Background information rebutting the failure of PES (the bankrupt refinery in PA) was caused by the RFS, and explaining how RVP waiver would lower RIN prices
Cruz on RFS Offensive
This DTN article is lengthy, but it unpacks the entire situation. For a very good, brief, analysis of how the PES bankruptcy was about mismanagement, not expensive RINs, scroll down to the subsection “PES FINANCIAL DEMISE”
Ethanol industry speaks out against PES anti-RFS rally
To understand more on the what ethanol proponents’ research has uncovered about why PES failed - this article is a list of quotes on the subject. It has several useful links embedded as well.
For More Information
Contact Adam Andrews at 502-974-1121 or email@example.com