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EPA's small refiner exemptions forces POET to curtail ethanol production

In the United States (US), the recent decision by the US Environmental Protection Agency (EPA) to grant 31 waivers under the small refiner exemptions (SRE) have forced POET, the country's largest corn ethanol producer, to curtail production and idle facilities.

POET Cloverdale biorefinery in Indiana (photo courtesy POET).

In March 2011, POET opened the 90 million-gallon-per-year ethanol plant in Cloverdale Indiana (IN), which it acquired from Altra Biofuels in June 2010. POET invested around US$30 million in upgrades, including BPX, POET’s patented fermentation process that uses enzymes instead of heat and POET’s Total Water Recovery system that cuts wastewater discharge making Cloverdale one of the most energy and water-efficient plants in the industry (photo courtesy POET).

POET, the nation’s largest producer of corn ethanol, announced August 20, 2019, that it will idle production at its bioprocessing facility in Cloverdale, Indiana (IN) due to recent decisions by the Agency regarding small refiner exemptions (SREs).

The process to idle the plant will take several weeks, after which the plant will cease processing of over 30 million bushels (≈ 762 000 tonnes) of corn annually and hundreds of local jobs will be impacted.

POET has reduced production at half of its biorefineries, with the largest drops taking place in Iowa and Ohio. As a result, numerous jobs will be consolidated across POET’s 28 biorefineries and corn processing will drop by an additional 100 million bushels (≈ 2.54 million tonnes) across Iowa, Ohio, Michigan, Indiana, Minnesota, South Dakota, and Missouri.

The Renewable Fuel Standard was designed to increase the use of clean, renewable biofuels and generate grain demand for farmers. Our industry invested billions of dollars based on the belief that oil could not restrict access to the market and EPA would stand behind the intent of the Renewable Fuel Standard. Unfortunately, the oil industry is manipulating the EPA and is now using the RFS to destroy demand for biofuels, reducing the price of commodities and gutting rural economies in the process, said POET Chairman and CEO, Jeff Broin.

The RFS can authorize small refinery exemptions (SRE) for refiners that:

  • process less than 75 000 barrels of petroleum a day, and
  • demonstrate “disproportionate economic hardship.”

However, POET points out that over the past two years, the EPA has issued waivers to refineries owned by ExxonMobil, Chevron, and other large oil companies—none of which are small and none of which have economic hardship.

According to POET, EPA’s “mismanagement” of SREs has created an artificial cap on domestic demand for ethanol and driven RIN values to near-zero, which weakens the incentive for retailers to offer higher blends.

Oil is making billions of dollars, yet still using EPA to stop biofuels growth by handing out hardship waivers to some of the wealthiest companies in the world, in contradiction with President Trump’s public comments. So far, the EPA has cut biofuels demand by 4 billion (US) gallons (≈ 15.1 billion litres) and reduced demand for corn by 1.4 billion bushels (≈ 35.6 million tonnes), causing severe damage in rural America.

POET made strategic decisions to support President Trump’s goal of boosting the farm economy. However, these goals are contradicted by bailouts to oil companies. The result is pain for Midwest farmers and the reduction of hundreds of jobs and hundreds of millions of dollars of economic activity across Indiana,  said POET President and COO, Jeff Lautt.

The recent announcement of 31 new waivers comes in steep contrast to the President’s rollout of year-round E15 earlier this summer. The SREs are wiping out any near-term growth potential for year-round E15 and challenging the President’s promises made to family farmers and rural communities. The President now has the opportunity to show his leadership on this issue and turnaround the rural economy.

Jeff Broin, Chairman and CEO, POET (photo courtesy POET).

“My long term fear isn’t for the biofuels industry, it’s for rural America. POET can continue to produce ethanol with cheap grain, but we don’t want to lose our family farmers. The EPA has robbed rural America, and it’s time for farmers across the Heartland to fight for their future,” said POET Chairman and CEO Jeff Broin (photo courtesy POET).

About POET

One of the world’s largest biofuels producers, POET is a leader in biorefining through its efficient, vertically integrated approach to production. Started in 1987, the company today has a network of 28 production facilities across 7 US states. Through its joint venture with DSM, POET also operates a commercial-scale cellulosic ethanol plant in Emmetsburg, Iowa, POET-DSM Project Liberty.

At full run rates, POET purchases 5 percent of US corn and produces 2 billion (US) gallons (≈ 7.6 billion litres) of ethanol, 10 billion pounds (4.54 million tonnes) of distillers dried grains (DDG), and 600 million pounds (≈ 272 400 tonnes) of corn oil annually.

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