Trump OKs year round E15 ethanol, nixes RIN caps, in dramatic White House meeting

May 8, 2018 |

In Washington, President Trump has agreed to allow for the sale E15 year-round.

The news was shared by Senator Chuck Grassley of Iowa, emerging from a White House meeting with President Trump to discuss the Renewable Fuel Standard also attended by Sens. Joni Ernst, Ted Cruz and Pat Toomey, EPA Administrator Scott Pruitt and USDA Secretary Sonny Perdue.

There was also an agreement to not pursue an artificial cap on RIN prices, which would have destroyed demand for biofuels and hurt biofuels workers.

But American Coalition for Ethanol CEO Brian Jennings was circumspect. “The president has promised on more than one occasion to allow E15 use year-round but EPA has so far refused to make good on that promise. We are pleased this meeting resulted in yet another promise about E15, but rural America is hurting and deserves immediate action.

“If initial reports of today’s meeting are true, we are also 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.  We call on EPA to issue an RVP relief rule immediately and allow retailers to sell E15 this summer while the rulemaking process runs its course. It should be noted EPA’s secret hardship waivers have effectively reduced ethanol demand by more than 1.5 billion gallons and RIN prices have fallen more than 50 percent since the White House has convened this series of RFS meetings.”

Good news, says Grassley

“That’s good news for farmers and consumer choice at the pump,”” said Grassley. “Allowing higher blends of ethanol to be sold in the summer months fits in well with EPA’s deregulatory agenda. 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.”

Cruz proposes RINs for exports

Senator Ted Cruz of Texas attempted to revive “an old gimmick in a last-ditch attempt to kill ethanol demand. His scheme to generate RINs on exports was put to rest last fall with Administrator Pruitt’s letter to several senators, outlining a series of RFS commitments,” said Growth Energy in a review of the meeting’s outcomes.

Last fall, Growth Energy commissioned research that showed the damaging impacts of an export subsidy for biofuels. The analysis shows immense impact on jobs, rural economies, and corn prices. Key findings included corn losses of $27.9 billion over the next four corn marketing years, n immediate drop of corn prices by 56 cents per bushel, and a reduction of 25,000 jobs supported by U.S. ethanol exports.

Iowa RFA – holding Trump, Pruitt to promises

“An RFS export RINs scheme slashes overall ethanol demand by at least 1.4 billion gallons, destroying billions in farm income,” stated Iowa Renewable Fuels Association executive director Monte Shaw. “Such a scheme would break President Trump’s promise to voters to uphold the RFS, break Pruitt’s commitment to several Senators to not pursue the idea, break the letter of the law that requires gasoline used in the United States to contain the applicable volume of renewable fuel, break the US’s WTO commitments as a clear export incentive, and will reduce overall ethanol production – undercutting the goal of US energy dominance. Ultimately, we need President Trump to fix the demand destruction from unwarranted small refinery exemptions, not agree to yet another demand destruction scheme.”

Famers, producers ramped up the pressure

The White House came under intense pressure from the US ethanol industry and US farmers in recent days. Key actions included:

America’s largest retailer chains in the E15 business sent a letter to the president (c/o Growth Energy) requesting a timeline for implementation of the President’s pledge to let retailers “offer a less expensive, higher performing fuel to our consumers at stations across America.” They also ask the president to “curtail the rapid expansion” of EPA Administrator Pruitt’s waivers to major refiners, undercutting the value of investments in retail infrastructure.

A coalition of other gas station operators from 11 states, including mom and pop stations in Iowa, sent a similar letter (c/o IRFA), adding a request that the White House provide immediate relief for the summer ahead by directing “the EPA to use its enforcement discretion to allow summertime E15 sales if the E15 restrictions are not formally removed by June 1st.”

The National Corn Growers Association, American Farm Bureau Federation, National Farmers Union, American Soybean Association and National Association of Wheat Growers also sent a letter to President Trump expressing concern about how “farmers have been negatively impacted by EPA’s decisions” amid the current agricultural crisis. They ask the White House to fix RVP, halt the abuse of waivers, and uphold a strong RFS — all without “further undercutting the RFS, such as imposing a RIN cap, and causing additional harm to the farm economy.”

There was an open letter from biofuel plant operators in 18 states published via full page ads in the Wall Street Journal, the New York Times, and the New York Post (c/o Growth Energy). It urges the president to “unleash rural growth by cutting the red tape” on E15 and condemns Administrator Pruitt’s waivers for “destroying demand for biofuels and crops during the worst farm crisis since the 1980s.”

State-based representatives of America’s corn growers issued their own letter to USDA Secretary Perdue, asking him “to continue to advocate for real solutions, such as RVP parity for higher blends, and to continue to highlight the demand destruction caused by EPA’s refinery exemptions.”

Industry reaction

Emily Skor, CEO, Growth Energy

“We are grateful the Administration will deliver on its promise for year-round E15 sales. Eliminating regulatory red tape so consumers can access this legal fuel year-round is a benefit to American drivers nationwide who appreciate that more biofuels means cleaner air and more savings at the pump. We hope the president’s decision will be acted on immediately so families can benefit during peak summer travel months. 

Brooke Coleman, Executive Director, Advanced Biofuels Business Council:

“President Trump scored a big win by putting a final nail in the coffin of the refinery-backed RIN cap scheme. We’re also encouraged that the White House has told EPA Administrator Pruitt to get to work immediately on a long-overdue fix to summer regulations that limit sales of E15.  But, as Senator Grassley said, the devil is in the details.

“Cruz now wants to reintroduce an old gimmick proposed by Valero. The plan would likely involve assigning RINs to some unknown volume of biofuel exports. Our champions made it clear to the White House that any plan that cannibalizes domestic growth would be a non-starter, which means that export RINs should quickly end up on the cutting room floor. Pruitt vowed to reject the same scheme in 2017. It doesn’t just threaten biofuels, it could spark retaliatory tariffs on any number of U.S. industries.

“President Trump also tasked the USDA and EPA with reexamining the destructive waivers granted to major refiners under the RFS. Cruz seems to think export RINs could fill the void left by EPA actions, but it won’t take long for stakeholders to realize that his solution would only dig the hole deeper and likely drag down the entire rural economy.”

Kyle Gilley, POET Sr. Vice President of External Affairs and Communications:

“We are pleased President Trump has vowed to cut the unnecessary red tape holding back the rural economy and stop Mr. Pruitt’s rampant abuse of hardship waivers for refiners at the expense of American-made biofuels. It’s clear the President recognizes the many benefits of year-round sales of E15 for consumers and for farmers who are suffering and facing new threats from trade wars overseas.

“It’s disappointing that Ted Cruz continues to push the administration for more legally-flawed bailouts for oil refiners that threaten to destroy the growth of renewable fuels and rural jobs. The Renewable Fuel Standard requires that biofuels are blended into America’s fuel supply to fulfill our nation’s environmental, economic and energy security goals.” 

Kurt Kovarik, National Biodiesel Board vice president of federal affairs

“We continue to appreciate the President’s commitment to support the RFS and the tireless effort of Senators Grassley and Ernst to protect America’s agriculture and biofuels industries. It appears that a harmful and nonsensical cap on RIN’s has finally been declared dead, and that the EPA will consider ways to reallocate the lost biofuel obligations resulting from the small refiner exemptions. However, any proposal to allow RIN’s for exports is simply another solution in search of a problem which will further undermine the Renewable Fuel Standard as a domestic energy independence program.  It would provide another bail out to refiners that have already benefited from more than two dozen questionable “hardship” waivers.  We’ll work to inform the administration of how this idea will harm soybean farmers and biodiesel producers, and is contrary to the President’s “America First” pledge to support America’s farmers, biofuels producers, and consumers.”

Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section

“Ensuring that E15 can be sold year round in states and regions where it is already approved will give advanced and cellulosic ethanol more opportunity to compete in the market in coming years. E15 reduces the price of gasoline by 5 to 15 cents per gallon, and it lowers tailpipe and greenhouse gas emissions all year round. A recent BIO analysis indicates that permitting current E15 sales to continue throughout the full year can reduce GHGs equivalent to taking 2.1 million vehicles off the road. Additionally, the Energy and Environmental Studies Institute finds that E15 can lower the public health impacts from transportation emissions, including reducing risks associated with cancer and asthma.

“BIO and its members continue to oppose unnecessary changes to the Renewable Fuel Standard. EPA has already provided unwarranted waivers to oil refiners that are destroying demand for all biofuels and undercutting industry investments. We thank Senators Grassley and Ernst for standing with us in opposition to the damaging proposal for a cap on RIN prices. We remain concerned about the impact counting RINs from exported renewable fuels would have on the development of advanced biofuels and we look forward to working with the Senators to ensure the RFS continues to promote production and use of homegrown biofuels.”

Bob Dinneen,  CEO, Renewable Fuels Association
“We are very grateful the President has affirmed his commitment to remove the regulatory barriers to the year-round use of E15, and we look forward to working with EPA to get this done as quickly as possible. We are also pleased that the President appears to recognize the harm that has been done to the RFS, ethanol producers, and rural America from the unprecedented number and scope of hardship waivers. However, the notion of allowing exported ethanol to count toward an oil company’s RFS obligation is extremely problematic. Depending on potential implementation, 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. 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.”
Adam Monroe, president, Americas, Novozymes

“President Trump’s decision to allow the year-round sale of E15 at the pump and not cap RIN prices is welcome news and comes at a critical time. June 1, for the first time in decades, should no longer mark the day when consumers must unnecessarily pay more for their fuel and retailers and farmers feel the pinch of lowered biofuel sales due to outdated, restrictive and unnecessary regulations.

 

In order for this decision to bring summer driving season relief as promised, the EPA must act immediately to enable swift regulatory change. This will allow the biofuel industry to deliver more of the low-carbon, low-cost renewable fuel that consumers demand throughout the year.”

 

Adam Monroe

President, Americas

Novozymes

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