By Keith Reid

The battle between oil and ethanol has been heated this year. Particularly contentious has been the ethanol industry’s objections to small refinery exemptions and their impact on Renewable Fuel Standard volume obligations. The administration’s push for year-round E15 only partially placated the ethanol industry’s concerns. This also happens at a time when the administration’s China tariffs are causing pain to U.S. farmers in a national election season.  For an overview see THIS previous Policy Brief.

On October 4 the Trump EPA responded with a policy initiative greatly beneficial to biofuel interests.

“President Trump’s leadership has led to an agreement that continues to promote domestic ethanol and biodiesel production, supporting our Nation’s farmers and providing greater energy security,” said EPA Administrator Andrew Wheeler in the official EPA press release. “Today’s agreement is the latest in a series of steps we have taken to expand domestic energy production and improve the RFS program that will result in sustained biofuel production to help American farmers.”

“President Trump has once again demonstrated that he is a champion for our nation’s farmers and rural America,” also stated USDA Secretary Sonny Perdue in the release. “The President recognizes that American farmers are the most productive in the world, and he has found a way to pursue policy that promotes economic growth and supports our producers. Building on the success of the year-round E15 rule, this forward-looking agreement makes improvements to the RFS program that will better harness the production of our farmers and ensure America remains energy dominant.”

As the release noted, under this agreement, the following actions will be undertaken by EPA and USDA:

  • In a forthcoming supplemental notice building off the recently proposed 2020 Renewable Volume Standards and the Biomass-Based Diesel Volume for 2021, EPA will propose and request public comment on expanding biofuel requirements beginning in 2020.
    • EPA will seek comment on actions to ensure that more than 15 billion gallons of conventional ethanol be blended into the nation’s fuel supply beginning in 2020, and that the volume obligation for biomass-based diesel is met. This will include accounting for relief expected to be provided for small refineries.
    • EPA intends to take final action on this front later this year.
    • In the most recent compliance year, EPA granted 31 small refinery exemptions.
  • Building on the President’s earlier decision to allow year-round sales of E15, EPA will initiate a rulemaking process to streamline labeling and remove other barriers to the sale of E15.
  • EPA will continue to evaluate options for RIN market transparency and reform.
  • USDA will seek opportunities through the budget process to consider infrastructure projects to facilitate higher biofuel blends.
  • The Administration will continue to work to address ethanol and biodiesel trade issues.

Positive feedback from “Corn Belt” politicians

“This is great news for Iowa and rural America. President Trump is following through on his commitment to our nation’s hardworking farmers and biofuels producers. The RFS is essential to the livelihoods of folks across our state, which is why I’ve been fighting tirelessly on behalf of Iowa’s farmers and producers every step of the way and making Iowans’ voices heard throughout this process,” said Senator Joni Ernst (IA).“Our message was clear: uphold the RFS—15 billion means 15 billion. The president heard that message and has acted on it. The steps outlined today by the administration will help increase demand for our biofuels, provide certainty for farmers and producers for years to come, and ensure that EPA is implementing the RFS as it was written.”

“President Trump listened to the concerns of farmers and biofuels producers and delivered on their behalf… The solution outlined by President Trump, Administrator Wheeler and Secretary Perdue is exactly how the RFS is meant to function according to the law as written by Congress… Maintaining the integrity of the RFS, repealing WOTUS and allowing year-round sales of E15 will all help American agriculture and the rural economy. These are promises made and promises kept by President Trump,” said Senator Chuck Grassley (IA).“President Trump has made clear that he is an ally of corn and soybean farmers as well as ethanol and biodiesel producers. He is fighting for the farmer. This announcement is great news for Iowa, the Midwest and the entire country.”

“In my discussions with the president, I fought hard for a fair deal for Nebraska’s farmers and ethanol producers,” said Senator Deb Fischer (NE). “I thank the president for following through on his commitment to rural America. Today’s announcement means more certainty for families, businesses, and communities across the Good Life.”

“Ensuring RVOs do not go below 15 billion gallons and expanding access to E15 will bolster the RFS and ethanol production at a critical time for our nation’s rural economy, which has been suffering from low commodity prices,” said Governor Pete Ricketts (NE).“Thank you to President Trump for taking these important steps for ethanol and our great farm families!”

“I want to thank the President for working with me to bring parity to farmers in my district, and the ethanol industry as a whole, by addressing the issue of small refinery exemptions,” said Congressman Rodney Davis (IL-13).“I recently introduced the bipartisan Small Refinery Exemption Fairness Act to address this issue and reobligate gallons lost to these exemptions, and I look forward to seeing the details of this plan that will put us on the right path forward.”

“This announcement comes at a time when Illinois ethanol producers needed a big win,” said Congressman Mike Bost (IL-12). “By maintaining the 15 billion gallon baseline and increasing access to E15, President Trump has shown he is working for American agriculture. Farmers across Illinois’ 12th District will be pleased with this announcement and the security it provides for the Renewable Fuel Standard.”

“Thank you President Trump for working with our farmers and ethanol producers to bring certainty and security to the RFS program,” said Congressman Don Bacon (NE-02). “I have long been an advocate for low-carbon biofuels and am hopeful that the finalized rules will unleash ethanol potential, provide transparency for Nebraska farmers and producers, and benefit consumers at the pump across the country.”

“This is welcome news for Iowa’s farmers and the renewable fuels industry,” said Iowa Secretary of Agriculture Mike Naig.“President Trump listened to our producers’ concerns and took action to address them. This is what happens when farmers, biofuels producers and government leaders work together to make our voices heard. We are grateful to President Trump for directing EPA to uphold the intent of the Renewable Fuel Standard, and we look forward to working with EPA and USDA to implement today’s announcement. As the number one producer of ethanol and biodiesel in the country, Iowa is proud to lead the nation in reducing our dependence on foreign oil. We will continue to work to restore and build demand for these critical markets for Iowa agriculture.”

 

Similar laudatory feedback from the ethanol industry

“President Trump’s announcement today has reaffirmed his commitment to farmers and rural communities and marks a great victory in the Renewable Revolution. The President’s actions will restore integrity to the RFS — starting with the 2020 RVO levels — and help pave the way for the rollout of E15, creating a huge win for farmers, biofuel producers, and consumers alike,” said Jeff Broin, POET Chairman and CEO. POET, headquartered in Sioux Falls, SD, is the world’s largest biofuels producer. “Millions of Americans will see greater savings at the pump and have the freedom to choose climate-friendly, American-made E15, while our nation’s farmers will see increased demand for their grain at a critical time. On behalf of all POET team members, we sincerely thank President Trump. We’re grateful for his leadership and the relentless support from our champions, Senators Ernst, Grassley, Thune, Rounds, Fischer, Sasse and Governors Reynolds, Ricketts and Noem.”

“We thank President Trump for hearing the concerns of ethanol producers, farmers and consumers across the country,” said Renewable Fuels Association President and CEO Geoff Cooper. “The plan announced today takes a crucial step toward repairing the damage done by EPA’s small refinery waivers and re-establishes the RFS as a driver of growth in the production and use of low carbon renewable fuels. Once finalized and implemented, this plan will ensure EPA follows the law in setting annual biofuel blending obligations under the RFS. President Trump’s action today not only begins to restore integrity to the RFS, but also starts to revive hope for farmers and ethanol plant workers who have seen small refinery exemptions wreak havoc on their markets and destabilize their rural communities.”

“It’s good the President is directing EPA to account for future Small Refinery Exemptions (SREs) beginning in 2020 to ensure more than 15 billion gallons is blended under the RFS next year,” said American Coalition for Ethanol CEO Brian Jennings. “We are grateful for this step in the right direction, but it isn’t a special deal, it is the White House finally directing EPA to follow the law. We will carefully examine how EPA proposes to offset future SREs in the supplemental rulemaking and will submit comments to shape an outcome to get the RFS back on track starting with the 2020 Renewable Volume Obligation (RVO). Of course, this implies EPA will continue issuing SREs in the future, likely following the recent pattern whereby an average of 30 small refineries were allowed to escape blending obligations. The difference is hopefully those blending obligations will be reallocated to non-exempt refiners going forward as required by law.

“It’s been a long process, but when the chips were down, President Trump delivered for farm families and biofuel producers,” said Growth Energy CEO Emily Skor. “This is a victory for rural America, and we are grateful to our champions in Congress, USDA Secretary Perdue, and governors across the heartland who fought to put homegrown energy back on the market. We also thank President Trump for hearing the voices of farmers and biofuel producers and his commitment to finding a solution that will make an immediate difference for rural families.”

 

Some not so laudatory feedback from the petroleum side

American Petroleum Institute President and CEO Mike Sommers and American Fuel & Petrochemical Manufacturers President and CEO Chet Thompson released the following statement: “We are deeply concerned about the Administration’s decision to, once again, play politics with our fuel system by increasing an already onerous biofuel mandate, placing greater strain on the U.S. manufacturers he promised to protect and threatening higher costs for consumers. The misguided reallocation of volumes punishes companies working to comply with the RFS and is an empty attempt to force more E15 into the fuel supply — a fuel nearly 70 percent of vehicles on the road were not designed to use. This rushed policy announcement is equivalent to changing the rules in the middle of the game and is a loser for the American consumer. If this arbitrary policy was conceived to help farmers, it provides no immediate relief — instead it only further distorts the fuels market. It is by no means a win-win. We will vigorously challenge this new policy in the weeks to come and continue advocating for Congress to reform the RFS.”