UPDATE 1-U.S. Refinery Workers Head to Washington to Urge Biofuels Reform

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March 07, 2018

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by Jarrett Renshaw (Reuters) A delegation of workers from U.S. oil refining companies that oppose the nation’s biofuels policy will converge on Washington on Wednesday to lobby lawmakers to find a way to lessen the regulation’s costs without hurting corn farmers and makers of the alternative fuels.

The trip, organized by the United Steelworkers union, marks the latest move in a battle between Big Oil and Big Corn over the fate of the U.S. Renewable Fuel Standard - a law requiring corn-based ethanol in gasoline that the refining industry says is costing it hundreds of millions of dollars a year.

More than two dozen workers from refiners Valero Energy Corp , HollyFrontier Corp, PBF Energy Inc and bankrupt Philadelphia Energy Solutions (PES) are expected to meet with lawmakers, including House Majority Leader Kevin McCarthy, a California Republican, to seek support for changes to the RFS.

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Rural biofuel plant workers and managers delivered a letter to President Donald Trump on Wednesday, reminding him of their industry’s economic importance to the nation’s heartland.

“After four straight years of declining agricultural income, your steadfast support of homegrown biofuels has been a lifeline for the farm economy,” the group wrote. “We ask that you send a clear and final signal that this administration will no longer entertain misleading schemes designed to kill the RFS.”

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PES, which employs more than 1,000 people in the key electoral state of Pennsylvania, in January blamed its bankruptcy on the costs of the credits. Reuters reported that other factors may also have played a role in its bankruptcy, including the withdrawal of more than $590 million in dividend-style payments from the company by its investor owners.

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Another White House meeting initially planned for this week to further discuss the idea may be postponed for logistical reasons, two sources said. In the meantime, the U.S. Environmental Protection Agency and the U.S. Department of Agriculture are preparing an analysis of Trump’s proposals for the White House, the sources said.

Separately, Republican Senator John Cornyn of Texas is drafting a bill that would alter the RFS to help refiners, though the key elements of his plan face resistance. READ MORE

New Fueling American Jobs Coalition Ad Campaign Urges President Trump to Protect Pennsylvania Workers (Fueling American Jobs Coalition)

REFINERS REMIND TRUMP HE NEEDS PENNSYLVANIA, TOO (Politico's Morning Energy)

Oil, agriculture and the environment deserve an improved Renewable Fuel Standard (The Hill)

Ethanol Industry Workers, Veterans Ask Trump To Support RFS (Renewable Fuels Association)

RFS Roundup: Deal or No Deal on RFS Reform (Environmental and Energy Study Institute; includes timeline)

Jobs are at stake, and not just in one refinery (The Hill)

API TO HEAD TO 1600 PENN (Politico's Morning Energy)

Biofuel plant managers ask Trump to protect RFS from Cruz (Ethanol Producer Magazine)

Biofuel producers ask Trump to defend RFS as oil workers storm DC (Biodiesel Magazine)

White House postpones talks on US biofuel mandate: refinery source (Platts)

Excerpt from Fueling American Jobs Coalition: The Fueling American Jobs Coalition announced today the launch of “Make the Deal,” a new ad campaign calling on President Trump to continue the historic accomplishments of his administration by finalizing a deal that fixes the Renewable Fuel Standard (RFS) and saves thousands of Pennsylvania jobs while growing U.S. ethanol production.

The rising cost of complying with the RFS has taken a significant toll on independent refiners, small gas-station chains and the hundreds of thousands of workers employed by both. Pennsylvania played a decisive role in the 2016 election, and thousands of refinery workers in the Keystone State are now counting on President Trump to stand up for their interests and provide relief at this critical moment.

WATCH: “MAKE THE DEAL”

Last week, lawmakers from major refining and corn producing states met at the White House to discuss a “win-win” solution to the flawed RFS. This solution would benefit both refinery workers as well as Iowa corn farmers. Following this productive meeting, we urge the administration to bring the deal home and protect the jobs of thousands of refinery workers before it’s too late.

“Make the Deal” will air on Fox and Friends, Hannity, and Lou Dobbs Tonight and a print version will appear in the Washington Post. The Fueling American Jobs Coalition will also be running a sustained digital campaign. READ MORE

Excerpts from Politico's Morning Energy: The Fueling American Jobs Coalition, an umbrella group of independent refiners is going up with a 6-figure ad buy today pushing Trump to cut a deal to reduce compliance costs for refiners under the Renewable Fuel Standard. The TV ad aims to remind Trump that he narrowly won Pennsylvania, and that the loss of refining jobs in the state could cost him in 2020. The ad aims to put Pennsylvania on the same footing as Iowa, which state RFS advocates say would be at risk if Trump forces changes to the program. The ad will run all week on some of Trump's favorite shows, including "Fox & Friends," "Hannity" and "Lou Dobbs Tonight," and there will be a print ad in The Washington Post. The ad is running against a Fuels America ad ME previously reported.

Trump asked for another meeting on the RFS at the end of a meeting last week with administration officials, senators, and oil and biofuels executives. But so far, there's no date for that meeting, according to ME's sources.

THIS IS NOT THE RFS BILL YOU'RE LOOKING FOR: While everyone with a stake in the RFS has been waiting with bated breath for Sen. John Cornyn to release his bill overhauling the program, Democrats have decided they're done waiting. On Thursday Sen. Tom Udall and Rep. Peter Welch will release their own. The Democratic bill doesn't mean a collapse in talks on the Cornyn bill - Udall has been acting as a Democratic point person - just that the Dems wanted to put out their own version of what they thought should happen. ME's best guess is that the bill will not please Team Ethanol: Welch has long wanted to cap ethanol blending at 9.7 percent, and Udall said in January his top priorities were promoting advanced biofuels and ensuring that open land isn't plowed under for ethanol feedstock. RFS critics National Wildlife Federation CEO Collin O'Mara and former Democratic Rep. Henry Waxman will also participate in the announcement.

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One hundred and fifty managers from biofuel production centers sent a letter to Trump today, urging the White House to defend the RFS. “We’ve seen Texas Senator Ted Cruz attempt to confuse stakeholders about the RFS, claiming that his attack on Renewable Identification Numbers (RINs) is not an attack on our jobs,” they write. “… There is no way to cut, cap, or eliminate RINs without cutting, capping, or eliminating gallons of homegrown fuel.” Read the letter text here. READ MORE

Excerpts from The Hill: Some environmentalists oppose the RFS because of its reliance on food-competing row crops for first-generation biofuels. However, this position needs to incorporate current facts. Corn ethanol is the cheapest octane booster available, so even if the RFS were to disappear, 10 percent of U.S. gasoline would come from corn ethanol. And because of steady increases in agricultural yields, total corn acreage peaked in 2013 and was less last year than in 2007.

Sunsetting the RFS will not hasten the contraction of corn acreage, but it will close this opportunity to transition to lower-carbon second-generation fuels with non-food feedstocks.

Remarkably, mutually compatible solutions to all three sets of concerns — by refiners, corn interests, and environmentalists focused on the need for second generation reform — are within reach.

A reformed RFS could sharply reduce compliance costs while enabling the sale of higher blends. A reformed RFS can also provide reliable financial support — support that can be “taken to the bank” — for new liquid fuel technologies that will help support a made-in-America transition to a low-carbon economy.

It might seem impossible to find common ground among the petroleum industry, agricultural interests, and the environmental community, but these groups reached an agreement in 2007 when the EISA was passed, and there is reason to believe it can be done again. For a new — and better — deal, environmentalists need to engage and seize the opportunity to provide reliable support to the second-generation fuels that will be needed in the decades to come.

James H. Stock is the Harold Hitchings Burbank professor of political economy in the Harvard Economics Department and a fellow at Columbia University’s Center on Global Energy Policy. READ MORE

Excerpts from Renewable Fuels Association: In addition to today’s effort, last year, scores of military veterans working in the ethanol industry sent President Trump a letter, reminding him that his “continued commitment to the RFS and pledge to ‘end restrictions that keep higher blends of ethanol from being sold’ are among the strategies that will help free our economy from the influence of OPEC oil ministers once and for all.” READ MORE

Excerpts from The Hill: American workers are benefitting from middle-class jobs at over 200 U.S. biorefineries, like Pennsylvania Grain Processing, where 85 workers supply a quarter of the Keystone State’s ethanol demand. Building and construction trades men and women build biofuel plants. Manufacturing workers are running the biorefineries. American seafarers and truckers ship feedstocks that are processed into biofuels by land and barge. Unionized workers manufacture farm equipment used to grow and harvest crops that become biofuels — just ask the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW). For these workers, the Trump administration’s support for homegrown biofuels has been a rare ray of hope.

Workers in these middle-class jobs have helped to make the United States the world’s top exporter of ethanol which, in turn, reduces the U.S.’s trade deficit, which has been bloated by oil imports for far too long. And the growth of biofuels at home has helped to drive economic development in rural areas of the United States that too many public policymakers have forgotten or ignored.

Any suggestion that we must choose between oil jobs and the substantial benefits that flow from these biofuel jobs is false. When it emerges from this latest bankruptcy, the court should require that PES invest in long-term job security for the men and women who operate and maintain that plant, like other Northeast refiners that are raking in huge profits. At the same time, those who care about restoring America’s middle-class should join in defending the RFS. READ MORE

Excerpts from Politico's Morning Energy: The American Petroleum Institute's executive committee will visit the White House where they may meet with Trump directly to discuss energy policy next week, sources tell Pro's Ben Lefebvre. The meeting comes amid an increasing sense of anxiety among energy executives, who worry that the sector's economic interests are not being considered in the White House's policies. Count the steel tariff, Gary Cohn's resignation and the exit of international energy adviser David Banks among the troubling factors. An API executive committee meeting with the White House is relatively rare, one of the sources said.

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NO RFS MEETING TODAY: Rumors swirled Wednesday that Trump would host another meeting with biofuel backers and critics on the Renewable Fuel Standard today. An oil industry source told ME Wednesday morning that a meeting had been planned but was called off. And so far Sen. Chuck Grassley had not been invited to anything, and a source in Sen. Joni Ernst's office said the same.

Talks are enough? Clever biofuel credits traders working for one of the refiners who need Renewable Identification Numbers to comply with the RFS could have saved a bunch of money if he or she bought every time there was an RFS meeting. ClearView Energy Partners released a report Wednesday noting that across nine RFS policy events of 2017 and 2018, prices for ethanol credits fell an average of 6 percent. "We tend to avoid technical analyses out of concern they might produce spurious conclusions, but we are always happy to remark upon strong coincidences," they wrote.

BLENDERS START YOUR ENGINES: The IRS on Wednesday issued guidance to help companies that blended biodiesel into diesel last year collect on their one-time $1 per gallon tax credit, and for paying a 9 cent-a-barrel tax into the oil spill trust fund taxes. Both the credit and the tax were inserted into a continuing resolution passed in February. Biodiesel blenders are hoping to get a credit for 2018 in the upcoming omnibus.

UPTON SKEPTICAL IT CAN BE DONE: Upton, former chairman of the Energy and Commerce Committee, said he's skeptical Congress can ink an agreement this year to update the RFS, Anthony reports. "My sense - having gone through this for a couple years - is that they're probably having the same [luck]," said Upton. "It's just really tough. Even if we could get something [in the House], and maybe we could, [they'll] find one person in the Senate, put up the stop sign. There were threats before that that was going to happen." Read more. READ MORE