Trump Weighs Boosts to Biofuels

September 16, 2019

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by Kelsey Tamborrino (Politico's Morning Energy) The White House is considering a plan that could limit the number of small refinery exemptions to the RFS, increase the volumes of biofuels that must be blended into gasoline and boost the spread of 15 percent ethanol fuels, four industry and other sources familiar with discussions tell Pro's Eric Wolff.

The biggest win for biofuel producers would be a limit on the number of exemptions EPA grants to small refiners from blending mandates under the RFS, Eric reports. Though the exact details are in flux, the ethanol volumes exempted from the program would be limited to the average from the previous three years, which would prevent EPA from hiking those exemptions to wipe out increases it sets in the annual blending mandates, sources said.

Trump was expected to publicly release his RFS plan on Friday, but is now expected to do so this week. The sources cautioned that the details of the plan are still under discussion and could change. READ MORE

Trump backs plan that would boost biofuel quotas 10% in 2020 (Reuters)

White House Plans Biofuel Quota Boost to Offset Refinery Waivers (Bloomberg)

Ethanol Blog: Reallocation Sticking Point in Biofuels Negotiations (DTN Progressive Farmer)

U.S. biofuel credits rise 10% on report of tentative biofuel reform deal: traders (Reuters)

Reynolds hints a Trump announcement on ethanol may be made in Iowa (RadioIowa)

CONSERVATIVE GROUPS CALL ON TRUMP TO END ‘SPECIAL FAVORS’ FOR ETHANOL: (Washington Examiner's Daily On Energy)

Letter: Administration should recommit to biofuels (The Columbus Dispatch)

Letter: Rural America kicked while down (LimaOhio.com)

Potter: How did I get on this list? (Kearney Hub)

Trump Touts “Progress” on Biofuels Deal (WOWO News)

Trump Tentatively Agrees to Boost Biofuel Quota (RigZone/Bloomberg)

Trump meets with senators from key farm states, touts biofuel deal progress (Reuters)

Trump backs plan that would boost biofuel quotas 10% in 2020 (Reuters)

Trump administration expected to release SRE deal (Ethanol Producer Magazine)

Even Donald Trump Thinks He’s Spending Too Much Time on Ethanol (BloombergQuint)

WITH TRUMP BACK IN TOWN, END MAY BE IN SIGHT FOR BIOFUELS DISPUTE (Successful Farming)

Excerpt from Reuters: Under the plan, the U.S. EPA will calculate a three-year rolling average of total biofuels gallons exempted from the mandates under its Small Refinery Exemption program and add that figure to its annual biofuel blending quotas each year, the sources said. For 2020, that figure would be 1.35 billion gallons, according to a Reuters calculation.

That would come in addition to a tentative agreement to boost next year’s blending volumes by 1 billion gallons, including 500 million gallons for conventional biofuels like corn-based ethanol and 500 million gallons for advanced biofuels like biodiesel, the sources said.

A court in 2016 ruled that the Obama administration illegally lowered the mandate by 500 million gallons, and part of the current proposed addition would satisfy the decision.

As a result, if the Trump administration followed through on the plan, next year’s total blending mandate would come out to about 22.4 billion gallons, from just over 20 billion in the EPA’s current proposal, according to the Reuters calculation.

The EPA has until the end of November to finalize its 2020 biofuel volumes mandates. READ MORE

Excerpt from DTN Progressive Farmer: In a letter sent to Trump on Thursday, a group of eight senators from oil-producing states said they remain opposed to reallocation.

"Any reallocation of volumes from statutory small-refinery exemptions or increase in renewable volume obligations for the 2020 compliance year would have a costly impact on consumers, the American refining sector, and thousands of well-paying, blue-collar jobs in our home states," the senators write.

The letter is signed by Sens. Ted Cruz, James Inhofe, Pat Toomey, James Risch, John Barrasso, Michael Enzi, Shelley Moore Capito and John Kennedy.

"Reallocation would violate the law and harm certain obligated parties, nullifying any relief achieved by issuing the SREs in the first place," the letter said. "Moreover, the EPA and the Department of Energy have concluded that small-refinery exemptions have not resulted in reduced ethanol demand.

"The financial problems facing the ethanol industry are unrelated to the RFS or the issuance of SREs. The ethanol sector suffers from a massive overcapacity problem, producing over 1 billion gallons more ethanol annually than American motorists can use due to the 'blend wall.' Obligated parties under the RFS are already mandated to blend more ethanol into the domestic fuel supply than the gas pool can accommodate, forcing refiners and fuel importers to turn to other biofuels, such as foreign biodiesel, to satisfy compliance."

The senators go on to ask Trump to create a conventional biofuel waiver credit.

"We were encouraged that you were receptive to this idea during meetings at the White House last year," the letter said.

"As you may recall, a waiver credit would be an insurance policy if nationwide sales of E15 did not reduce RIN (renewable identification numbers) prices, which is what the ethanol lobby claimed would occur. Now that the ethanol industry has been given E15, a waiver credit would be both a fair deal for both parties and provide a degree of predictability so that American refineries do not have to shutter operations."

In addition, a group of more than 60 refinery managers expressed concern in a letter to Trump this week about the proposed increase of biofuels volumes for 2020 by 1 billion gallons.

"We know the fuels markets we serve, and the fact is that ethanol is a valuable commodity and would continue to be used without mandates," the managers wrote.

"The domestic biofuel industry is already unable to economically meet currently mandated volumes of biofuel. Therefore, increases in biofuel mandates are likely to come from imported fuel and could increase the price at the pump. Last year alone the U.S. imported hundreds of millions of gallons of biofuel to satisfy these mandates.

"The bottom line is that proposals under discussion will do little to help American farmers. However, U.S. refineries are doubly impacted. First, regulatory costs would increase and second, the fuels our own refineries produce would be further displaced by biofuels produced in other countries." READ MORE

Excerpt from Ethanol Producer Magazine: Trump confirmed Sept. 12 that he had hosted another “big meeting on ethanol” earlier that day. “We had a great meeting with Chuck Grassley, Join Ernst, Mike Rounds,” he said to reporters before boarding Marine One, according to the White House. That meeting also included Iowa Gov. Kim Reynolds and Sen. John Thune, R-S.D. “I think we had a great meeting on ethanol, for the farmers,” Trump continued. “I think we had—our meeting was a great meeting. Let’s see what happens. But there’s been nobody better to farmers than Donald Trump, that I can tell you. I think we made a lot of progress on ethanol…”

Reynold confirmed the meeting in an Sept. 12 tweet. “Appreciated the opportunity to meet with [Trump] at the White House today to discuss the importance of ethanol to rural America!” she wrote. “We know how important this industry is to our hard working farmers and I will never stop fighting for it.”

Sen. Chuck Grassley, R-Iowa, also addressed the meeting in a tweet. “Met ystrday w Pres Trump at White House w Sen Ernst Gov Reynolds + other Midwest senators ethanol/biodiesel are hurting in Iowa EPA need to follow the law of 15B gallons Farmers are counting on [Trump],” he wrote on Sept. 13.

“Just finished a productive meeting with [Trump} about the #RFS. Iowans’ voices are being heard and process is being made,” Sen. Join Ernst, R-Iowa, tweeted Sept. 12.

Information obtained by Ethanol Producer Magazine on Sept. 14 indicates the proposal currently expected to be approved and released by the administration would boost the proposed 2020 RVO from its current 20.04 billion gallons to 22.386 billion gallons. The increase would include a 500 million gallon boost for D5 advanced biofuel, a 500 million gallon boost for conventional biofuel and an SRE adjustment of approximately 1.346 billion gallons. The deal would also increase the 2021 RVO for biomass-based diesel by 250 million gallons. It appears the 500 million gallon boost for conventional biofuels would also be carried through 2021, with a 2021 SRE adjustment of 1.583 billion gallons.

The EPA is expected to issue a supplemental proposal to its 2020 RFS rulemaking to incorporate those changes. That rulemaking, which includes 2020 RFS RVOs and the 2021 RVO for biomass-based diesel was released in July. A public comment period on the proposal closed Aug. 30. Under statute, the EPA is required to finalize the rulemaking by Nov. 30. Those familiar with the supplemental proposal have indicated the EPA plans to meet that deadline. READ MORE