Trump Biofuels Plan Mixed Bag For Farmers

May 9, 2018 12:06 PM
Farmers and ethanol industry leaders alike remain skeptical over President Trump’s biofuels plan saying year-round E15 is a win, but allowing RIN credits for exported fuels undermines the RFS.

Farmers and ethanol industry leaders alike remain skeptical over President Trump’s biofuels plan saying year-round E15 is a win, but allowing RIN credits for exported fuels undermines the Renewable Fuels Standard (RFS).

Following another meeting of RFS stakeholders on Tuesday, the White House announced President Trump made a final decision that would “allow E15 to be sold year-round, while providing relief to refiners.”

According to Pro Farmer’s Jim Wiesemeyer, Trump told lawmakers and administration officials in a biofuel policy meeting at the White that he favors allowing exported biofuel to count toward RFS requirements.

“Under current rules, once biofuels are exported, the Renewable Identification Numbers (RINs) associated with those exports will not count toward RFS levels. Trump directed USDA Secretary Sonny Perdue and EPA Administrator Scott Pruitt to finalize the details of such an action,” he explains. “Pruitt testified to lawmakers April 26 that EPA was working on the legal justification for E15, expecting there will be court challenges to making the fuel available year-round.”

Wiesemeyer says allowing exported biofuels to count toward the RFS obligations as a way to bring down RIN prices was floated last fall by the Trump administration, but heavily opposed by biofuel interests. Many of those interests were displeased with yesterday’s announcement as well.

Kevin Skunes, a corn farmer and president of the National Corn Growers Association (NCGA) says the group opposed RIN credits on exports last fall and still does.

“Offering RIN credits, which are supposed to be derived from a domestic renewable fuel use, for ethanol exports would threaten trade markets and impact corn farmers’ economic livelihoods,” he says. “Pursuing a path that includes RIN credits on export gallons would violate the letter and spirit of the RFS, serving the interests of oil refiners who have already benefitted from Administrator Pruitt’s unprecedented RFS volume waivers at the further expense of America’s farmers.”

Bob Dinneen president and CEO of the Renewable Fuels Association (RFA) says this proposal will create confusion for ethanol customers around the world.

“Allowing exports to qualify for RFS compliance could dramatically reduce domestic ethanol demand, while most certainly resulting in retaliatory trade barriers from the countries importing U.S. ethanol,” he says. “Our trade partners in the international market certainly would not understand why the lowest-priced ethanol in the world requires an export subsidy. The real disgrace with a proposal of this nature, however, is that ethanol producers and farmers would bear the brunt of any retaliatory tariffs; they would be subsidizing highly profitable oil companies, who would benefit from the reduced RINs costs. In no way will that ever be acceptable or considered a win for our industry.”

Similarly, Sen. Jonie Ernst (R-IA) says she’s “still assessing the full implications of the president’s notion to attach RINs to exported ethanol.”

Sen. Chuck Grassley, who was in Tuesday’s meeting, says he’s not sure whether or not the president’s plan will be positive or negative for American ethanol.

"Had WH mtg on RFS/ethanol. No RIN cap & got E15 yr round. Need to see Perdue+Pruitt plan. Devil in details," Grassley wrote on Twitter. “I told the president and Administrator Pruitt that EPA’s ‘hardship’ waivers for billionaires are hurting biofuels and undermining the RFS. They also undercut the President’s commitment to meet the annual 15 billion gallon volume obligation set by Congress under the RFS. There was discussion about how to reallocate the waived obligations so that demand for biofuels wouldn’t be hurt. While details weren’t decided, I look forward to reviewing a plan being developed by Secretary Perdue and Administrator Pruitt. Any fix can’t hurt domestic biofuels production.”

Year-Round E15

Industry stakeholders agree the year-round sale of E15 will be a net positive for agriculture.

“Allowing E15 year-round will drive up domestic ethanol production and consumption to help maintain already low RIN prices,” Ernst says.

According to Skunes, year-round sales of E15 are welcomed but there are still a lot of unanswered questions.

“We appreciate the agreement on eliminating the outdated regulation on higher blends such as E15, a barrier that has long needed removal, and thank Senators Joni Ernst and Chuck Grassley for their tireless efforts on behalf of agriculture,” he says. “However, many questions remain unanswered as Secretary Perdue and Administrator Pruitt determine next steps and provide more details. Moving forward, NCGA will continue to advocate for policies that protect our farmer members.”

Still, not everyone is even remotely pleased by yesterday’s agreement.

"It is unfortunate we have a still-broken system that forces Americans to consume volumes of ethanol well beyond the natural demand. The compliance device invented by the Environmental Protection Agency, Renewable Identification Numbers (RINs), is devastating to Pennsylvania refineries,” says Sen. Patrick Toomey (R-PA) adding that the White House proposal could relieve RIN pressure, but that won’t be clear until details are established.  

Brian Jennings, CEO of the American Coalition for Ethanol (ACE) says yesterday’s agreement isn’t enough.

“[We are] pleased this meeting resulted in yet another promise about E15, but rural America is hurting and deserves immediate action,” he says. “[ACE is] concerned EPA appears free to continue rubber-stamping secret RFS waivers for people like Carl Icahn who own refineries while the June 1 RVP limit date is fast-approaching.”

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