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Ethanol Groups May Not Get Year-Round E15 Without Concessions

15:51PM Jun 07, 2018

News rippled through the agriculture sector earlier this week that President Trump planned to release his highly anticipated biofuels plan, but it was a plan pro-ethanol groups said undermined the Renewable Fuels Standard (RFS). Not only did renewable fuels groups expect the President to allow the sale of E15 year-round, but it was rumored the plan would be attached to placing renewable identification numbers (RINs) on ethanol exports, as well as allowing the Environmental Protection Agency to continue to grant “hardship waivers.”

While pro-ethanol groups feared the plan would take one step forward and two steps back, the White House at the last minute decided to not agree to the plan. It’s a move ethanol groups and pro-ethanol Senators applauded.

“I thank the President for rejecting a proposal once and for all that would have undermined the RFS and really hurt ethanol,” said Sen. Chuck Grassley (R-Iowa).

Grassley says the president rejected the proposal “once and for all,” but that may not be the case. There are now questions as to why the administration had a change of heart, and if the plan is really being abandoned, or simply put on the backburner. U.S. Farm Report interviewed Agriculture Secretary Sonny Perdue at the White House this week, and he says agriculture’s extreme distaste for the president’s plan is what ultimately drove the administration to back away from the changes.

“The president told me last night he was not going to sign anything that farmers weren't happy with it,” said Perdue the day after the move. “There's been some concern over attaching RINs to the export credits there, and I told him and communicated to him that there was going to be a lack of joy even with the E15 waiver, which we've been wanting for several years.”

Perdue said he stressed to the president that slapping RINs on exports would “cancel the party” over a biofuels deal from agriculture’s standpoint.

“I think he understood that and his commitment to me - I think as well as the senators - was that he didn't plan to sign anything that the farmers weren't happy with and I think that's again a support that he's tried to give our farmers all along and fulfill his commitment to RFS he made during the campaign,” said Perdue.

Ethanol groups are applauding the president’s move, but now there are questions around the president’s push for an RVP waiver, which would allow the sale of E15 gasoline year-round. Perdue says while the pathway forward for that is unclear, he says USDA will continue to support that move.

“We don't need to lay out the pathway necessarily, but we won't stop,” said Perdue. “It's important and we think it's the right thing to do. We think to give consumers a choice of having that on a year-round basis. Scientifically there's no reason not to do that, but we'll have to see how we go forward. We're not going to stop working.”

Now that the biofuels plan seems to be stalled, it’s unclear whether the White House will move forward with any plan at all. White House legislative affairs director Marc Short told U.S. Farm Report that ethanol groups may not be able to get an E15 win without giving something up to refiners.

“I think some ethanol lobbies pretty strongly believe they want to just get E15 12 months without any concessions to the refiners,” said Short. “I think they're putting a little bit of a stop on the that [the biofuels plan], but I'm so optimistic we'll get there.”

The commitment from the both the White House and the Agriculture Secretary over E15 is similar to what Environmental Protection Agency Scott Pruitt has stated in the past. However, the ethanol industry says Pruitt is giving mixed signals, as he continues to grant “hardship waivers” to oil refiners who claim the business is facing financial hardship, due to the RFS. It’s that hardship that’s causing heartburn with USDA.

“We're fairly frustrated about that, honestly, and I viewed it sort of as a circumvention of what the president has insisted over the 15 billion gallons,” said Perdue.

Perdue said the president’s proposal did have a positive on the waiver front, with action to stop the “waiver bleed.”

“We've been unsuccessful in getting legally and EPA administratively to recover the lost waiver RINs that we've had over the last couple of years, even with the court case of the 500 million [gallon short-fall],” said Perdue. “We're not going to stop asking about that, and we'd love to have those recovered. I think there has been a direct contradiction of what we felt like the president support of our RFS was, and we’ll continue to make that case.”

Grassley also harped on EPA’s use of the waivers, saying he will continue to put a stop to Pruitt’s actions.

“Looking ahead, I’m going to continue to push for changes to the way the so called ‘hardship waiver’ process is implemented,” said Grassley. “Administrator Pruitt’s waivers to date have undercut the 15 billion gallon blending requirement mandated by Congress.”

As some in agriculture push to stop the waivers, while allowing E15 to be sold year-round, one possible way to get to E15 is for Congress to step in and take the lead, but Short said that’s an unlikely option, as the RFS is also a contentious issue within Congress.

“Congress certainly can pass legislation as it related to RFS, we think finding 60 votes right now is difficult,” said Short. “This issue is divisive and often it pits refiners versus agriculture. What the president is working on with several members of Congress is to say if we were to provide E15 for 12 months a year as a rule, then could we also provide some relief to refiners that allows them to get credit for exporting RINs, but we think that would help boost demand for ethanol, demand for one would help farmers. We think that's a win- win formula.”

Short said some members of the administration view RINs as artificial, and the way the system is structured, it doesn’t allow the free-market to work in determining the price.

“So, you want to find some accommodation for refiners that are having to trade on those,” he said.