Parties to White House Biofuel Deal Disagree What's Agreed

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May 09, 2018

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by Jennifer A Dlouhy and Mario Parker (Bloomberg) Tentative agreement struck during a White House negotiation; Refiners could benefit with biofuel exports allowed for quotas -- A tentative deal on U.S. biofuel policy struck at the White House would allow year-round sales of higher-ethanol gasoline in exchange for possible policy changes to rein in compliance costs for refiners.

But major elements of that compromise remained in dispute hours after the meeting between top administration officials and four senators ended, and it could take months for agencies to develop and finalize rules implementing the changes.

"President Trump is pleased to announce that a final decision has been made that allows E15 to be sold year-round, while providing relief to refiners," White House spokeswoman Lindsay Walters said by email. "This outcome will protect our hardworking farmers and refinery workers. The president is satisfied with the attention and care that all parties devoted to this issue.”

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Walters did not detail the specific type of "relief" the Trump administration was promising refiners.

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Cruz (Senator Ted Cruz (R-TX))was more emphatic, saying Trump had "made a decision" and that both the president and White House chief of staff John Kelly had affirmed there was "a final agreement."

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Grassley (Senator Chuck Grassley (R-IA)) praised the agreement to sell gasoline containing 15 percent ethanol year-round, calling it "good news for farmers and consumer choice at the pump." And Grassley said the Trump administration made the right decision in rebuffing a cap on RIN prices that "would have destroyed demand for biofuels and hurt biofuels workers."

But he suggested any change on exports would come only after further negotiation between Environmental Protection Agency Administrator Scott Pruitt and Agriculture Secretary Sonny Perdue, who also attended Tuesday’s White House summit.

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Top administration officials also agreed to pursue a policy change that would allow refiners to trade in RINs tied to exported biofuel.

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It’s not clear, however, that there’s a consensus on that approach.

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Grassley used Tuesday’s meeting to complain the EPA is too liberally granting refiners exemptions allowing them to ignore biofuel quotas, without reassigning the waived quotas. The practice effectively undercuts a nationwide quota to use 15 billion gallons of conventional biofuel, typically corn-based ethanol, Grassley told reporters Tuesday.

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Emily Skor, chief executive officer of Growth Energy, a Washington-based trade group whose members include Poet LLC and Green Plains Inc., said the organization was "very pleased" a deal had been reached to allow for the year-round sale of E15 and that there was no cap on RINs. But Skor criticized the export idea of allowing exported biofuel to count toward domestic compliance, calling it "nonsensical” and warning such a plan could be seen as a subsidy, prompting retaliatory tariffs. READ MORE

EPA Waiving Biofuel Quotas Spurs Rebuke From Ethanol Supporters (Bloomberg)

Trump says may move to count ethanol exports toward biofuels quotas: sources (Reuters)

POET Issues Statement on White House Meeting on Biofuels and RVP (GrainNet)

President Trump to Allow Year-Round Sales of E15 Ethanol (Associated Press/Quad City Times)

Ethanol Report on White House RFS Meeting (Energy.AgWired.com; includes AUDIO)

Senators: Trump wants year-round sales of high-ethanol gas (Associated Press/Des Moines Register)

RIN prices fall after White House RFS meeting (Argus Media)

Ethanol RINs tumble to three-year lows on White House deal (Platts)

Devil in the White House RFS Deal Details (Energy.AgWired.com)

Year-round E15 Sales Closer to Reality After White House Meeting (Hoosier Ag Today)

Biofuel uncertainty? RINs cap dead, but ethanol export credits on the table (Agri-Pulse)

Trump: E15 Year-Round, Find Waivers Fix -- EPA, USDA to Explore Attaching RINs to Ethanol Exports (DTN The Progressive Farmer)

Trump to allow year-round E15 sales, attach RINs to exports (Ethanol Producer Magazine)

Ethanol Groups Push Back on White House Compromise Involving RINs for Exports (OPIS)

STU ELLIS: Ethanol deal fuels questions from farm groups (Herald & Review)

Trump OKs year round E15 ethanol, nixes RIN caps, in dramatic White House meeting (Biofuels Digest)

Trump to allow year-round E15 sales, attach RINs to exports (Biomass Magazine)

Trump agrees to ethanol mandate changes, senators say (The Hill)

NOVAK SAYS RIN CREDITS FOR ETHANOL EXPORTS “BAD IDEA” (Brownfield Ag News)

Trump says may move to count ethanol exports toward biofuels quotas: sources (Reuters)

Good news for ethanol industry -- A limitation on sale of this important Iowa product is ending (The Messenger)

Excerpt from Energy.AgWired.com: However, the “win” on the oil side is reported to be reallocating the approximately 1.6 billion gallons of renewable volume obligations exempted by EPA through “small refinery” waivers by allowing exported ethanol gallons to count toward an obligated party’s blending requirement – which would amount to an export subsidy likely to result in retaliatory trade actions.

In this edition of the Ethanol Report, Renewable Fuels Association President and CEO Bob Dinneen reacts to the news and explains why allowing RIN credits for exported U.S. ethanol is unacceptable. READ MORE

Excerpt from Associated Press/Des Moines Register: The White House meeting included Iowa Sens. Grassley and Joni Ernst, President Trump, EPA Administrator Scott Pruitt and USDA Secretary Sonny Perdue. Sens. Ted Cruz, R-Texas, and Pat Toomey, R-Pennsylvania, also were in attendance. READ MORE

Excerpt from Argus Media: Compliance costs associated with the program have tumbled as the high-level meetings progressed. Argus-assessed costs associated with the program have fallen from 10.1¢/USG at the beginning of December to today's 3.92¢/USG close. READ MORE

Excerpt from DTN The Progressive Farmer: The full implementation of E15 will not happen overnight as it still faces a number of roadblocks to full market expansion.

Brooke Coleman, executive director of the Advanced Biofuels Business Council, said in a statement to DTN, "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."

Roger Johnson, president of the National Farmers Union, questioned how fast EPA might act on E15 because if some kind of approval is not achieved by then, then year-round E15 would not come until 2019 at the earliest.

"The only way they could do it now is to do an emergency rule, otherwise you have lost E15 for this summer," Johnson told DTN.

EXPORT RINS

As for examining the possibility of attaching RINs to exports, the idea was proposed by Valero Energy Corp. in 2017 and opposed by ethanol interests. The RINs program is designed to spark domestic blending of ethanol and there are concerns that attaching RINs to exports undermines the RFS.

In an Oct. 19, 2017 letter to Midwest senators, Pruitt said the agency would not pursue the RINs export proposal (https://www.ernst.senate.gov/…).

Growth Energy Chief Executive Officer Emily Skor said in a statement to DTN the idea would harm agriculture and biofuels.

"Attaching a RIN to ethanol exports would have a crippling impact on American agriculture, significantly reducing demand for ethanol and corn," she said. READ MORE

Excerpt from Ethanol Producer Magazine: The Biotechnology Innovation Organization applauded the E15 announcement but said it opposes unnecessary changes to the RFS. “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,” said Brent Erickson, executive vice president of the Industrial & Environmental Section at BIO. “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,” Erickson continued. READ MORE

Excerpt from Biofuels Digest: 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 1^st.”

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.” READ MORE