ALTOONA, Iowa — Despite a horrific 2019, ethanol and biodiesel producers are more upbeat about 2020.
“2019 was a year we won’t soon forget, but we wish we could,” said Derek Winkel, president of the Iowa Renewable Fuels Association (IRFA) as he kicked off the Jan. 16 Iowa Renewable Fuels Summit here. “It was an arduous year, and I am glad to have it in the rear-view mirror.”
IRFA Executive Director Monte Shaw echoed that.
“Last year I declared that 2018 had been the worst year of my then 19 years of advocacy on behalf of renewable fuels and farmers,” Shaw told the crowd at last week’s summit. “Now, with 20 years under my belt, it’d be tempting to say 2019 was even worse.”
The reasons 2019 was bad are not complicated. Difficult weather challenged farmers. Commodity prices were poor. Federal refinery exemptions devastated the industry. Ethanol and biodiesel plants reduced production or shut down. In Iowa, ethanol production dropped for the first time ever. And, to add insult to injury, the EPA’s final rule regarding the 2020 Renewable Fuels Standard was not what had been promised by the Trump administration.
But Shaw said that with a few weeks of introspection, he thinks the policy moves made over the past year will pay off in the long run. He said E15 continues to make market inroads, and the rule to allow it in the summer will help in the long run.
And even the Dec. 19 EPA move, while a violation of trust by the administration, might still mark an improvement.
Geoff Cooper, president and CEO of the national Renewable Fuels Association, said 2019 was not good, but it is time for a fresh start in 2020.
“I really am not going to sugarcoat it,” Cooper said. “As my kids would say, 2019 really sucked.”
The industry wins were overshadowed by setbacks in 2019, Cooper said. But he pointed toward a few reasons for optimism in 2020.
One is that the government reached what it is calling a phase one trade agreement with China. The trade war, along with the refinery exemptions, destroyed demand in 2019. While the exemptions remain, Cooper is hoping that the recent rule might lead toward some reduction in the waiver levels, though that is still uncertain. The phase one trade deal holds the potential of helping demand, although tariffs remain in place on ethanol.
“It’s definitely short on details,” he said of the deal.
Ethanol shipments to China peaked in 2016, when over 200 million gallons of ethanol were shipped there. When tariffs went into place, that figure immediately dropped to about 50 million gallons.
The other good news comes from the biodiesel side, where Congress brought back the biodiesel tax credit, making it retroactive for two years and extending it through the end of 2022. That, Cooper said, is tremendous news for the biodiesel market.