Trump in High-Stakes Balancing Act between Oil and Corn ahead of 2020 Bid

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September 06, 2019

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by Humeyra Pamuk and Jarrett Renshaw (Reuters) At a closed-door meeting at the White House on Aug. 19, President Donald Trump looked increasingly alarmed as his top envoy to China delivered evidence of rising Farm Belt frustration over his biofuel policy along with a stark warning: You’ve got a problem in Iowa.

Terry Branstad, the former Iowa governor and now U.S. ambassador to China, told Trump that while farmers may have remained loyal to him despite the economic pain caused by the more than year-long trade war with China, they would not stomach policies favoring the oil industry at their expense, according to four people familiar with the substance of the meeting.

The administration, he explained, was undermining Trump’s support in the battleground of Iowa and Wisconsin, by freeing too many oil refineries from obligations to add corn-based ethanol to their fuel, according to the sources, who requested anonymity because they are not authorized to discuss internal deliberations.

At the near two-hour meeting that also involved Trump’s top security and economy advisers, Branstad showed a map of counties that had flipped in Trump’s favor in 2016 but were now considered at risk in the November 2020 election. Branstad also listed quotes from Democratic presidential candidates assailing his biofuel policy as a betrayal of corn farmers, and headlines about ethanol plants shutting down across the Midwest, the sources said.

His presentation shocked the Republican president, who was previously assured by his political advisers that he had Iowa “locked.”

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Trump’s Environmental Protection Agency has handed out 85 such waivers since he took office, up from 23 during the last three years of the Obama administration, saving the oil industry hundreds of millions of dollars but enraging the corn lobby which argues it kills demand. READ MORE

TRUMP'S RURAL BASE MAY REJECT PRESIDENT IN 2020 BECAUSE HE DESTROYED DEMAND FOR CORN, IOWA ETHANOL BOSS WARNS: 'COMPLETE DISAPPOINTMENT' (Newsweek)

Ethanol industry struggles under current policies (Jamestown Sun)

Do U.S. farmers still support Trump? Perdue says yes (Glacier Farm Media/The Western Producer)

Senator Says Administration's EPA Rule Waivers Are Hurting Ohio Farmers (WKSU)

UNLIKELY ALLIES: CALIFORNIA AND IOWA LOOK TO CLEANER ETHANOL (Iowa Starting Line)

Another Payoff for Ethanol--Trump hasn’t figured out that this lobby won’t stay bought. (Wall Street Journal)

Tim Walz: Exempting refineries from biofuel requirements is a kick in the gut to farmers (Twin Cities Pioneer Press)

Trump is two-faced when it comes to agriculture (AgriNews)

ETHANOL MANDATES MUST BE ENFORCED TO KEEP INDUSTRY AFLOAT (Iola Register)

Letter: Thanks to EPA, ethanol producers are on the run (Columbus Dispatch)

Ethanol Report’s DC Update (Renewable Fuels Association: AUDIO)

Can Trump save his ethanol support? (Farm Progress)

White House Mulls Biofuel Quota Boost (Bloomberg/RigZone)

Biodiesel Industry Spotlights Waiver Pain (Energy.AgWired.com)

Letter: We have an ally in the war on ethanol (RiverTowns.net)

Excerpt from Iowa Starting Line: Leaders from the California Air Resources Board (CARB), a major influencer in how markets nationwide respond to environmental concerns, took a trip to Iowa last week to visit ethanol production plants and corn farms, talking to ethanol-industry leaders in the state about expanding biofuel usage in California.

The goal was to continue building the working relationship between ethanol producers and climate/air quality leaders to develop carbon-neutral or even carbon-negative forms of fuel. This would present a win-win for many sides — pretty much everyone except the fossil fuel industry and petroleum companies. We could all breathe cleaner air, and the Midwest stands to make a ton of money.

Several of the West Coast visitors seemed like they came away from the week impressed with just how much carbon soil can store, and how efficient corn can be.

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Low Carbon Fuel Standard
California, and CARB in particular, is working hard to find ways to transition away from fossil fuels. One day that will mean electric cars, but the country is still a long ways away from a significant percentage of vehicles being electric. In the interim, they’re looking at using corn ethanol as a way to move away from oil and reduce cars’ carbon footprint, as long as it can be produced sustainably and with little-to-no environmental impact.

“Renewables and bio-diesel, renewable natural gas, ethanol, and electricity are all seeing growth under the Low Carbon Fuel Standard (LCFS),” said Richard Corey, executive officer at CARB. “The LCFS is catalyzing investments in these cleaner alternative fuels, providing consumers with more choices, and reducing emissions of toxic pollutants and greenhouse gases.”

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The LCFS is a legislative program designed to reduce greenhouse gas (GHG) emissions, but is fuel-neutral. The aim of the LCFS is to reduce the carbon intensity (CI score) of fuels used in the U.S.

Without getting too technical, CI is “the lifecycle GHG emissions for a fuel per unit of transportation energy delivered.” Simply put, it’s a calculation that puts a number on carbon output during production processes; the lower the number, the better.

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From discussions during CARB’s trip to Iowa, it is clear that the potential for carbon-neutral ethanol is there. From a facilities standpoint, the science is pretty much developed. From a farming perspective, knowledge is rapidly advancing on carbon sequestration, land usage, regenerative agriculture and sustainable practices like no-tillage and “cover-crops.”

It was said several times throughout the week that Iowa’s ethanol producers are waiting for a sign that there is a market for low-carbon ethanol. If California is able to provide that market, even more money will be spent in Iowa to develop facilities and farms to produce corn and cellulosic biofuels with the lowest possible CI score.

In fact, agronomy expert David Clay, a professor at South Dakota State University, said fertilizers are now the biggest challenge in lowering CI scores.

“If we can reduce the need and production of that natural gas nitrogen fertilizer production, we can get to carbon-neutral ethanol production,” Clay explained. “I’ve done some calculations, it’s a very large amount of carbon that can be stored [through the farming process] — just a huge amount of carbon.”

Messaging Will Make The Difference

There seemed to be a ton of learning occurring from people visiting Iowa — the ethanol producers hosting, non-profit groups in attendance, farmers and more. A good amount of time was set aside for discussions amongst all the groups represented, which led to talks of coalition building and limiting opposition to biofuels.

Coalition building was a major point of emphasis, but those in attendance recognized the challenges of bringing together the most staunch environmentalists with the agriculture industry. READ MORE

Excerpt from Farm Progress: On Wednesday, Minnesota Gov. Tim Walz and South Dakota Gov. Kristi Noem sent a letter to Trump recommending actions the President might include in his plan to mitigate the effects of the small refinery waivers. Walz and Noem are the chair and vice chair of the Governors’ Biofuels Coalition.

“Since 2016, your Administration has issued 85 exemptions, representing a loss of over 4.3 billion gal. of ethanol. We are hearing from farmers and renewable fuel producers that the waivers are the reason an increasing number of renewable fuel plants are closing or idling production,” the governors wrote.

There’s still time for the President to make things right, they suggested, with the first recommendation being to have the Environmental Protection Agency add the lost gallons to the pending 2020 renewable volume obligations (RVO) proposed rule. Many biofuel groups offered this as part of their suggested changes to the proposed RVO levels when comments closed the previous week.

Walz and Noem also suggested that the Administration could initiate another Biofuels Infrastructure Partnership program through the U.S. Department of Agriculture so states and private partners can match more federal funds and improve consumer access to renewable fuels.

In addition to addressing these issues, there are several other steps they suggested Trump could take to help expand the market for ethanol — “for example, increasing the minimum octane standard in gasoline to create an immediate market for more ethanol and eliminate the need to import octane. You could also direct EPA to enforce the Clean Air Act requirement to replace the aromatic toxics in gasoline, which would allow refiners to use ethanol — a less expensive source of octane,” the letter stated.

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Still, many editorials are now lining newspapers across the U.S. from farmers who are feeling betrayed.

Farmer Andy Jobman wrote a letter to the editor in the Kearney Hub stating that he listened to the President’s profound support for American farmers and ethanol just a few months ago at the Council Bluffs rally and found Trump's decision to approve 31 small refinery exemptions as “outrageous.” Jobman described himself “as a patriot with dwindling patience and faith in the President.”

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Even President George W. Bush, who hailed from oil-rich Texas, signed into law the initial and stepped-up versions of the Renewable Fuel Standard (RFS) in 2005 and 2007.

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In writing for the American Petroleum Industry (API) blog, Mark Green said the White House is expected to increase required 2020 conventional ethanol volumes by 500 million gal. and 2021 biodiesel volumes by 250 million gal.

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However, the Renewable Fuels Assn. (RFA) countered that in 2011, EPA legally approved the use of E15 in all cars built in 2001 or later, which means that 92% of all registered cars and trucks on the road today can use E15. READ MORE