North Dakota ethanol production has been taking a beating over the past year. We've had a challenging growing season and with lower demand, the industry is seeking relief in the law.
A phrase to remember: The Renewable Fuel Standard. A federal law mandating that a certain amount of ethanol be blended into gasoline. Over the past few years, an increase in exemptions, is forcing factories to close.
Ethanol plays a significant role in North Dakota agriculture and energy; consuming upwards of 60 percent of corn grown. But profit margins for the plants are thinning and dissolving.
Last Summer, China placed a 70% tariff on U.S. Ethanol, putting pressure on an already volatile international market.
"The demand for ethanol is there. If you look at the RFS, the demand for ethanol is supposed to be 15 million gallons of corn-based ethanol. That's what the law says. The small refinery waivers deviate from that law," said Gerald Bachmeier, Red Trail Energy, LLC.
Industry leaders point their fingers at the EPA and an increase in Small Refinery Hardship Waivers, which allow companies to not blend ethanol into gasoline. These waivers have exempted more than 4 billion gallons of ethanol from being used.
"I think from a state perspective, North Dakota Ethanol is feeling the heat nonetheless. But we're all in pretty good hands. And I think we'll be one of the ones to survive this, if you will, downturn in demand. And weather the storm," Bachmeier said.
Other states have seen their ethanol plants closing. One in Minnesota, and another in Iowa announced they're losing their third. While North Dakota isn't at a closure point, many are concerned about the long-term impact.
After reaching out to all five ethanol plants in North Dakota, managers mentioned slimming margins, but none mentioned the possibility of a plant closing.