Ethanol producer blames Indiana plant closure on EPA

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The owner of a western Indiana ethanol plant is blaming its shutdown on the Trump administration’s decision to allow some refineries to not blend ethanol with gasoline as required under federal law.

South Dakota-based ethanol producer Poet LLC said it will cease production by mid-October at its Cloverdale plant, one of four it operates in Indiana. A company notification says 50 workers will lose jobs from the closure.

The company said production is being cut at half of its 28 plants where corn is processed into ethanol. Poet said it’s consolidating jobs at plants in Iowa, Ohio, Michigan, Indiana, Minnesota, South Dakota and Missouri.

The Environmental Protection Agency has issued gasoline refinery exemptions removing 2.6 billion gallons of ethanol from production.

Poet calls those exemptions “bailouts to oil companies.”

The controversy involves a 14-year-old federal law that dictates oil refineries use biofuel to satisfy annual quotas set by the EPA. The statute authorizes the EPA to issue exemptions for small refineries facing a “disproportionate economic hardship,” but biofuel proponents argue the administration has handed out the waivers too freely and is undermining domestic demand for the products.

The EPA decided to grant 31 exemptions from 2018 biofuel-blending quotas, and deny six other applications, following months of internal deliberations and after Trump intervened to authorize the move. But the president said Monday he felt misled by the high number of approvals, according to two people familiar with the discussions.

The exemptions have caused anger throughout the Midwest, where biofuel producers, their political allies and farmers view the waivers as curbing demand for their products, amid a trade war with China that has already diminished sales. Biodiesel producer World Energy Corp. last week blamed the refinery waivers and a lapsed tax credit for a decision to shutter three of its plants.

EPA officials and oil industry advocates push back against assertions that refinery exemptions are eroding demand for ethanol.

“There is zero evidence that EPA’s congressionally mandated small refinery exemption program, which provides regulatory relief to small refineries around the country, has had any negative impact on domestic corn ethanol producers,” the agency said in an emailed statement. “In fact, the Trump administration has overseen year-over-year increases in domestic fuel ethanol production, to the highest level in history and the United States exported a record volume of ethanol in 2018 for the second consecutive year.”

The EPA said its decisions take into account direction from Congress, recommendations from the Department of Energy and recent court decisions that rapped the agency for denying some refinery waivers.

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3 thoughts on “Ethanol producer blames Indiana plant closure on EPA

  1. I have read this AP story several times and I’m not sure what it is about. Are the waivers in the form of a tax cut or a subsidy? How does this affect me at the pump?
    With export grain sale down why cut ethanol production? The article even states “There is zero evidence that EPA’s congressionally mandated small refinery exemption program,” sooooo what is the point?

    It appears to me that this AP story is all about blaming President Trump, for what, I’m not sure. I feel the story was sloppily written (maybe that is why there is no name on it) other than the Associated Press and Bloomberg News

  2. The Renewable Fuel Standard (RFS) itself is a bailout to the farm community. Since this standard has been introduced corn production and prices have risen dramatically. This means that that cost of all corn products to the consumer has risen while we also spend tax dollars subsidizing the program.

    Ethanol from corn may be biobased but it is bot especially ‘environmentally friendly’ due to the energy required to produce the ethanol from corn and the 5-15% reduced gas mileage seen with many cars.

    Whether the reasoning for the recent decisions to provide waivers or not for using bioethanol make sense or not, the real issue is the RFS program itself. We need to find other means to work with the ag community for using their crops and output.