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Perdue Says He Stands With the RFS; Grassley Says Schooling Is Needed
A farm convention audience cheered Agriculture Secretary Sonny Perdue as he declared his unequivocal support for biofuels. His speech came just a day after he participated in a White House discussion of possible revisions to the Renewable Fuel Standard. Iowa Senator Charles Grassley, the foremost Senate proponent of corn ethanol, later told reporters that Perdue needs some additional grounding in the issue.
“I think he spoke out very strongly for ethanol yesterday,” said Grassley, referring to the meeting of President Trump, administration leaders, and four Republican senators at the center of the dispute over the RFS. Texas Senator Ted Cruz has suggested putting a price cap on RINs, the credits that refiners must buy to show compliance with the RFS if they cannot blend enough ethanol and biodiesel into car and truck fuel. Cruz and other oil-state senators blame the recent bankruptcy of a Philadelphia refinery on the expense of buying RINs.
“I think he [Perdue] might have come up with some solutions for the issue that Cruz has brought up that I don’t think are helpful. I think he feels there’s an intellectual basis for what he’s saying, and it will be my job to sit down and tell him how wrong he is,” Grassley said during a teleconference.
Grassley declined to specify who advocated what position during the closed-door meeting beyond saying that “too many people” wanted to package approval of year-round sales of E15, a blend of gasoline that is 15% ethanol, with a cap on RIN prices. There also were “persons” who wanted to attach RINs to ethanol shipped overseas, he said, which in the view of ethanol producers, would be “very harmful.”
Year-round E15 sales would boost the ethanol market and, by itself, bring down RIN prices, said Grassley. “You don’t need to cap it.”
Speaking to farmers at the Commodity Classic in Anaheim, California, Perdue said he unequivocally supports the RFS. “President Trump stands with corn and biofuels — and he stands for the RFS. I stand with him, and I stand with you,” said Perdue. “I have not, I will not support any policies that diminish RFS and our producers.” Successful Farming magazine noted that the audience stood in applause as he emphasized his point. “I am a farmer first, and a farm businessman next. … I know the value of demand. The demand structure is vital to the economy today.”
Yet Perdue said at a news conference that he does not understand why farm groups pay so much attention to RIN prices. Grassley, for one, says that capping RINs at a low price would destroy the incentive for refiners to blend biofuels because it would be cheaper to simply buy RINs. According to The Hagstrom Report, Perdue also said the ethanol industry should not be tied so much to the RFS because beginning in 2022, the EPA will have great leeway in setting biofuel targets. At present, the RFS calls for blending 15 billion gallons of corn ethanol into gasoline annually. DTN/Progressive Farmer quoted Perdue as saying his goal was for the EPA to remove barriers to the year-round sale of E15. Currently, the blend cannot be sold during the summer.
Questions about his commitment to biofuels were “fake news,” said Perdue. Trump ate lunch with Perdue and EPA Administrator Scott Pruitt, an RFS critic when he was Oklahoma’s attorney general, on Monday, the day before the meeting with the senators. Politico reported that the two cabinet officers would present a package that called for a cap on RIN prices, year-round sale of E15, RINs on ethanol exports, and EPA regulations to keep speculators out of the RIN market.
The president of the Iowa Corn Growers Association talked to Perdue on the sidelines at the Commodity Classic, “seeking to make the connection of RINs to ethanol use and corn farmers,” said DTN/Progressive Farmer. More than a third of the U.S. corn crop is used to make ethanol.
At Tuesday’s sit-down with the senators, Trump asked for a meeting today with ethanol and oil industry representatives to delve further into the impacts that biofuels and petroleum have on each other. Deputy Agriculture Secretary Steve Censky was to represent agriculture at the meeting.
The kerfuffle over biofuel policy marks one of the first times that Perdue’s standing with farmers has been in doubt. In early February, Trump proposed a one-third cut in federal spending on crop insurance, including sharply higher premiums on the most popular type of policy, carrying the so-called Harvest Price Option. Although the idea has little support in Congress, no one has taken Perdue to task for the proposal any more than they blamed him for a 2017 budget proposal to slash crop insurance.