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Trump’s Vague Plan to Boost Ethanol has the Oil Industry Threatening to Sue
The Trump administration responded to months of Farm Belt complaints that it was undermining homegrown biofuels by vowing to increase the ethanol mandate, beginning next year, above the 15-billion-gallon-a-year target that is set by law. Officials did not specify a new figure for corn ethanol usage nor did its package include the oil industry’s goal of a cap on the price of credits that refiners must buy if they do not mix enough ethanol into gasoline.
Most farm groups and the ethanol industry praised President Trump for ensuring the Renewable Fuel Standard would be honored. “Fifteen billion [gallons] means 15 billion,” said Iowa Senator Joni Ernst. The oil industry said it would fight a change in rules for the 2020 RFS and hinted at lawsuits to block the initiative announced by EPA Administrator Andrew Wheeler and Agriculture Secretary Sonny Perdue on Friday.
The EPA is scheduled to finalize the 2020 RFS in November. It would set the corn ethanol target at 15 billion gallons. Ethanol groups and Corn Belt allies say the ethanol mandate effectively has been reduced because the EPA, particularly since Trump took office, has issued “hardship” waivers that retroactively exempt small-volume refineries from having to comply with the RFS.
“President Trump successfully negotiated an agreement on the Renewable Fuel Standard,” said the EPA. Under it, the EPA “will propose and request public comment on expanding biofuel requirements beginning in 2020 … to ensure that more than 15 billion gallons of conventional ethanol be blended into the nation’s fuel supply … 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.”
Additionally, the EPA said it would begin work to streamline labeling and remove barriers to sale of E15, a 15% blend of ethanol into gasoline. The traditional blend is 10%. Biofuel advocates see E15 as the pipeline for larger sales of ethanol. The EPA also said it would promote use of biodiesel and “evaluate options for RIN market transparency and reform.” RINs are ethanol credits.
Meanwhile, the USDA would “seek opportunities through the budget process to consider infrastructure projects to facilitate higher biofuel blends.” The USDA has used an energy efficiency program in the past to share the cost of “blender” pumps that can dispense higher blends of biofuels.
Ethanol makers and the oil industry have fought for years over the RFS. Trump has tried periodically to referee the struggle. In August, he promised farmers a “giant package” that would assuage angst over the small-refinery waivers and also save the refineries.
House Agriculture Chairman Collin Peterson said the administration needed to be more explicit in how it would assure 15 billion gallons of ethanol would be used and how it would make up for RFS waivers that cumulatively total 4 billion gallons. “Until we have answers to those questions, today’s announcement is just another IOU to struggling farmers and shuttered biofuel plants.”
The trade group Renewable Fuels Association said 18 plants with combined annual capacity of nearly 1 billion gallons have been idled or closed in the past year. U.S. ethanol consumption fell in 2018 for the first time in 22 years. The industry blames the waivers. To the oil industry, the problem is saturation of the gasoline supply at the traditional 10% blend rate; there’s no place to absorb all the biofuels, it says.
“Actually, it is bad politics,” said a lobbyist for small refiners, referring to the administration package and Trump’s reelection prospects. “Union workers will be at risk in key Rust Belt states like Pennsylvania and Ohio.” One of Trump’s priorities is a healthy manufacturing sector.
Trump remains highly popular among farmers despite unrest over ethanol. Two weeks ago, a handful of corn and soybean farmers warned that Trump could face “political consequences” in rural America if he did not support biofuels. If Trump makes it right, said Iowa farmer Kelly Nieuwenhuis, “I think people will come back.”