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Scott Irwin

8 Dec, 9 tweets, 4 min read

1. Think it is important to understand what just happened to the 2020 RVOs in yesterday's EPA rulemaking. Here is a link to the rulemaking (warning don't print it out unless you want to use a lot of paper) epa.gov/sites/default/…

2. So let's review. The EPA issued a final rulemaking on the 2020 RVOs in late 2019 under the Trump Admin. We thought it was FINAL. The first column in the chart shows the RVOs in that FINAL rulemaking. Implied conventional (corn ethanol) was at the statutory level of 15BG.

3. Once the RVOs in gallons are finalized, then they are enforced in % terms on obligated parties (refiners). The base for the % RVOs is projected gasoline and diesel use in 2020 with some adjustments. That base number was 173.82BG in the FINAL rule.

4. The RVOs are enforced in % terms because this allows compliance to adjust or "float" as actual gasoline and diesel use differs in a year from what was projected when the FINAL rulemaking was made.

5. So when the COVID pandemic hit in March 2020 there was an automatic adjustment mechanism built into RFS compliance for 2020. The %s were fixed, not the volumes. The key is that COVID should not be a valid reason to change the FINAL rulemaking. It could adjust.

6. So, now we have the actual values for all the data needed to compute volumes for 2020 compliance. Published in the rulemaking released yesterday. The new base number is 160.37 compared to 173.82 in the FINAL rulemaking.

7. The second column in the table shows the RVO compliance volumes that would have been enforced if the FINAL rulemaking for 2020 had been left in place. The total RVO would have dropped 1.56BG automatically.

8. But, no the automatic downward adjustment in the 2020 RVOs was not good enough for the refiners. They pushed for new RVOs set way below what even the automatic adjustment would have been. The third column shows these new SECOND FINAL RVOs.

9. Bottom-line: the SECOND FINAL (just love the ridiculous sound of that) RVO for 2020 released yesterday is a cut of 1.4BG over and above what would have simply happened automatically. That is not chump change and should not be glossed over. Big win for refiners.

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Scott Irwin

@ScottIrwinUI

10 Dec

1. Weekend Reading: Continuing theme of the value of USDA reports. Fast forwarding to recent research rather than my older stuff. Up next is, "Are USDA reports still news to changing crop markets?" 2019 Food Policy paper. Several great co-authors. sciencedirect.com/science/articl…

2. Background: old question with a new twist. People have been questioning the value of USDA crop reports forever. Been examining that question pretty much my entire academic career. In the last decade or so a new twist on that line of attack emerged.

3. Last decade has seen the rise of "big data" companies that use satellite remote sensing data, lots and lots and lots of other weather data, and super sophisticated statistical modeling in order to forecast acreage and crop production. Some see this as making the USDA obsolete

Read 12 tweets

Scott Irwin

@ScottIrwinUI

9 Dec

1. Yesterday had some fun commenting on the SECOND FINAL RVO for 2020 from the Biden EPA. Today I'm going to look at the broader question of the volume and value of the RIN relief provided to refiners in the latest rulemaking for 2020 and 2021.

2. Here is my recap of 2020. EPA rolled back the total renewable RVO by 1.4BG more than would have happened with the automatic downward adjustment due to COVID pandemic under the FIRST FINAL RVO for 2020. That is a good estimate of the gallons given to refiners for that year.

3. Now what about 2021? The Biden EPA did not have to adopt the cockamamie logic of COVID, the little reset, and lateness to crush the 2021 RVOs. It is important to be clear that the Biden EPA did not have to do this. It was a simply a choice.

Read 10 tweets

Scott Irwin

@ScottIrwinUI

8 Dec

1. My last thread walked through the numbers on the SECOND FINAL RVO for 2020. Now lets think about what happened more from a regulatory standpoint. EPA had a FIRST FINAL RVO for 2020 and then proposed going back and retroactively changing it to a SECOND FINAL RVO.

2. Here is a way to think about it. A parent says to a child. Here is a family rule, break it and there will be this consequence. The child breaks the rule and the parent says at first the consequence is still in play but I am going to wait to enforce it for awhile.

3. After awhile, the parent goes back and changes the rule so that there is no consequence whatsoever for the misbehaving child. Now what kind of behavior do you think that will lead to in the future for the child?

Read 4 tweets

Scott Irwin

@ScottIrwinUI

7 Dec

1. Different quick take on the RVOs just released today. Try to shed some light on just how much did Biden EPA crush the RVOs in the rulemaking for 20-22? To start, I use the final previous 2020 RVO of 20.090 as the benchmark. I call it the status quo.

2. I then take the difference between the 20.09BG benchmark and total RVOs for each year over 2020-22. Simple. That nets out to a cut of 3.85BG in total for the three years. May I say YUUUUGE.

3. EPA also finally going back and addressing the 2016 remand from the July 2017 court case (gee only took 4 yrs). Adding on 250MG in 2022 and 2023. I am interpreting that as additional to stated total RVO. Still need to check further.

Read 6 tweets

Scott Irwin

@ScottIrwinUI

7 Dec

1. Finally got to the RVO rulemaking. Here are the actual numbers straight from the document. Slightly different than in my previous thread. Implications same. Still surprised there was so little change from the leaked numbers in September.

2. Those that said the leaked numbers in Sep could not be right were wrong. This is only slightly different from the leaked numbers. I gotta dig in and see how in the world they justified cutting the 2020 RVO AFTER a final rulemaking.

3. Biden EPA went with what I call the "little reset" provision to justify crushing the RVOs for 2020 and 2021. That was the only possibility that I could think of back in Sep and that's what they did.

Read 4 tweets

Scott Irwin

@ScottIrwinUI

7 Dec

1. With the RFS RVO rulemaking apparently being released today. Dug out my cheat sheet for the numbers prepared back in September when there was the big leak.

2. Key issue is how close the released RVOs are to the leaked RVOs. Will the Biden Admin crush the 2020/21/22 RVOs as in the leaked proposal? Gonna find out.

3. I think one number will tell the tale. Did the Biden EPA mess with the final RVO for 2020? Refiners badly want this to be lowered.

Read 4 tweets

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