"That's Chuck Grassley. Should I Take the Call?" Klobuchar Keynote Ignites ABLC

March 05, 2018

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by Jim Lane (Biofuels Digest) In Washington, an unplanned on-stage telephone conversation between Senators Amy Klobuchar and Senator Charles Grassley of Iowa was the highlight of ABLC 2018 as high drama at the White House over biofuels policy turned for just one moment into side-splitting comedy.

“What happened with the biofuels meeting?” Klobuchar asked a small group of ABLC delegates as she arrived onto what has become informally known as the Trading Floor at ABLC’s main hub at Washington’s Mayflower Hotel — a long, narrow corridor where as many as 300 high-level delegates can be found horse-trading, renewing ties, and making connections over coffee.

“We were going to ask you the same question”, answered one of the ABLC delegates, who immediately began to swarm around the popular Minnesota senator when she began to make her way towards the ABLC main stage for her planned keynote address.

“You know, let me call Chuck,” she said, producing her smartphone and dialing.

She reached a Grassley aide who explained that the Iowa Senator was on another line and would call back.

Shortly afterwards, Klobuchar took the stage, and began her planned keynote, when her smartphone rang. She mischievously looked out at the ABLC delegates and asked.

“That’s Chuck Grassley. Should I take the call?”

The audience cheered loudly and encouraged her to pick up the phone.

“Hi Chuck,” she said, “So what happened in the meeting?” Grassley began to explain.

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Klobuchar continued her keynote with her usual mix of light comedy on the foibles of Washington politics — relating polished stories about Chuck Schumer, Minnesota congressmen Collin Petersen and Melania Trump — mixed in with an authoritative recitative of recent biofuels politics and the evolution of policies. And she threw in strong words of support for the impact of the bioeconomy in her home state of Minnesota and the bipartisan activity of ag state senators for the industry on Capitol Hill — and the need to continually reach out to bring in allies from coastal and urbanized states.

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The moments of onstage comedy, however, did not lessen the seriousness with which the industry viewed the attacks in recent days on the Renewable Fuel Standard from a small group of merchant oil refiners — virulent enough to even attract a press release from the American Petroleum Institute discouraging a settlement excessively weighted towards the interests of these small refiners.

POET CEO Broin was apoplectic after the White House meeting.

“It’s clear from this conversation that another refinery bailout is more important to Sen. Cruz and the EPA than the economic crisis facing Midwest voters at the moment. Nothing new was discussed in this meeting. Removing accountability from oil companies would deprive millions of Americans the freedom to choose less expensive, homegrown biofuels and imperil countless jobs and family farms across America’s heartland. I want to thank the President for the opportunity to share the story of how our industry fuels the economic engine of the Midwest. In November, 119 counties there flipped Republican based on President Trump’s commitment to rural economic growth and strong support for the Renewable Fuel Standard. This issue will continue to play out. We will protect interests of this industry, farmers and consumers.” (Link to POET news)

“Both sides made their case and the only agreement was to look at economic studies for impact,” Grassley said in a statement released to media after the event. “No decisions were made. Low corn prices are already squeezing farmers’ bottom lines. If the RFS were undermined with a RIN price cap or waiver, that would be made even worse. Thousands of jobs in rural America could be lost. An emerging solution appears to be year-round E15, which would drive down RIN prices. After crossing the 15 billion gallon a year threshold, RIN prices would drop dramatically and remain low. And studies prove it.”

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At major fuel retailers, Sheetz, executive vice president Mike Lorenz said, “Retailers want to offer our customers options, including lower-cost, higher-octane ethanol blends. An RVP waiver lifts needless regulations on retailers, generates growth opportunities for American farmers, and makes more RINs available to refiners. The President is looking for a solution that is a win for everyone – farmers, refiners, and consumers – and I think being able to sell E15 year-round meets that goal.”

The issue backstory

At stake was an update on a White House meeting between President Trump, a number of small merchant oil refineries and two of the largest ethanol producers in the US, Poet and Green Plains, over a protracted dispute about the impact of high ethanol RIN prices, under the US Renewable Fuel Standard, on merchant refinery economics.

In recent weeks, Philadelphia-area refinery PES had filed for bankruptcy, citing the impact of RIN prices — an analysis hotly contested by the biofuels industry and national media reporting on the refinery owner’s asset management strategy. (More on the PES dispute here).

The Big Oil vs biofuels drama sharply escalated last week when the White House hosted a meeting between Senator Crus of Texas, Senator Toomey of Pennsylvania, and Senators Grassley and Ernst of Iowa — aimed at brokering a deal on RFS reform.

After talks quickly stalled, Trump asked to meet directly with industry leaders — and it was the 2pm meeting set for Thursday that dominated the morning discussions on the ABLC stage.

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The real story on PES’ bankruptcy

Joelle Simonpietri ignited a media storm when she published this analysis in the Digest. READ MORE

Biodiesel No Problem in RFS Talks (Energy.AgWired.com)

Possible U.S. deal on biofuels would allow year-round 15 percent ethanol blend: Grassley (Reuters)

NO RFS MEETING YET! (Politico's Morning Energy)

Biofuel credit prices drop without deal: Update (Argus Media)

Biofuels debate heating up in DC (AgWeek)

Energy Recap: Talking Biofuel Policy (Seeking Alpha)

Third Time's Not a Charm as Trump Tries to Craft a Biofuel Fix (Bloomberg/RigZone)

Trump pushes Big Corn and Big Oil to break biofuels deadlock (Reuters)

UPDATE 1-U.S. ag secretary seeks to calm farmers after Trump biofuel talks (Reuters)

Excerpts from Politico's Morning Energy: Trump may have asked for another meeting on the Renewable Fuel Standard last week, but as of Monday, Sen. Chuck Grassley hadn't received his invitation, and Deputy Agriculture Secretary Steve Censky said in a meeting with reporters that he wasn't aware that anything had been scheduled yet, either.

USDA digs into RFS: Censky did tell reporters that his agency is analyzing the proposals that emerged from Thursday's meeting between Trump, lawmakers and industry executives. "We want to make sure, from our side, we want to make sure to talk about the positive benefits that we believe an RVP waiver for blends above 10 percent will have on RIN prices," he said. "We think that they'll go down, not only in the short term, but especially over the medium and long term, that that will help quote solve any kind of problem that exists out there." Censky had no timeline for when the study would be finished. READ MORE

Excerpts from Bloomberg/RigZone: Senator Chuck Grassley, a Republican from Iowa, the top U.S. corn growing and ethanol-producing state, tweeted after the meeting about what he called an “emerging solution.”

A “true win-win” is selling E15 year-round, a change that would lower refiners’ compliance costs while also helping farmers squeezed by low corn prices, Grassley said on Twitter.

Participants in Thursday’s gathering included the same Republican senators who met with Trump on the issue Tuesday: Ted Cruz of Texas, Pat Toomey of Pennsylvania, and Grassley and Joni Ernst of Iowa.

Economic Impacts Debated

But the focus was on 11 industry representatives who came to spell out the economic consequences of potential biofuel policy changes, including the chief executives of biofuel producers Poet, Green Plains Inc. and Renewable Energy Group Inc. and oil refiners Valero Energy Corp., PBF Energy Inc. and Delta Air Lines Inc.’s Monroe Energy LLC.

Bill Horan, a farmer with Western Iowa Energy LLC, and United Steelworkers President Ryan O’Callaghan also participated.

Tom Nimbley, chief executive of New Jersey-based refiner PBF Energy Inc., termed the conversation “productive.”

“We will continue to work with the president, senators and all stakeholders that can provide important reforms that are a win for farmers and a win for union refinery workers,” Nimbley said in an emailed statement.

But Jeff Broin, chief executive of ethanol producer Poet LLC, who also participated in Thursday’s gathering, said “nothing new was discussed.”

Jobs Imperiled?

“Removing accountability from oil companies would deprive millions of Americans the freedom to choose less expensive, homegrown biofuels and imperil countless jobs and family farms across America’s heartland,” Broin said in an emailed statement. “This issue will continue to play out. We will protect interests of this industry, farmers and consumers.” READ MORE