Will the RFS Deal Protect Innovation and Our Planet?

September 18, 2019

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by Stephanie Batchelor (Biotechnology Innovation Organization (BIO)/Biofuels Digest) As we speculate on the details and implications of the administration’s renewable fuels deal, the future of an entire green industry hangs in the balance.

The debate over the Renewable Fuel Standard (RFS) has become muddied with rhetoric about special interests and government handouts while energy innovation and the health of our planet are being held hostage.

If the administration, as rumored, increases the 2020 volumes for conventional and advanced biofuels, that would be welcome news and a move that might help smooth over some of the fury caused by the recent announcement of refinery waivers issued to oil companies under the RFS.

Unfortunately – as long as lost gallons from these exemptions are not reallocated in 2020 – that increase would do nothing to provide meaningful relief to American farmers and biofuel producers who are already experiencing significant hardship.

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Couple this with continued delays in the approval of new biofuel pathways and registrations for production facilities, clean-burning biofuels are sitting dormant waiting to be unleashed.

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The administration needs to uphold the intent of the Renewable Fuel Standard by providing a solution that encourages investment in clean energy innovation.

As long as pathways for such advanced biofuels remain unapproved and unnecessary regulatory exemptions go unchecked, our investment in green energy erodes. READ MORE

Trump May Reallocate Waived RFS Gallons: Senators From Oil-Producing States Set to Meet With Trump on RFS Deal (DTN Progressive Farmer)

'I've been hoodwinked so many times': Grassley wants Trump's ethanol fix 'on paper' before he will support it (Des Moines Register)

REFINERY BOSSES TELL TRUMP TO SHUN FARMERS' BIOFUEL DEMANDS AS 2020 SHOWDOWN LOOMS BETWEEN BIG OIL AND BIG CORN (Newsweek; includes VIDEO)

Rehder 'sick' about ethanol plant closure (Sioux Center News)

Trump Will End California’s Authority to Set Stricter Auto Emissions Rules (New York Times/Governors' Biofuels Coalition)

To the editor: Don't let up on ethanol (Toledo Blade)

Sen. Grassley Hopes Trump Biofuels Plan Coming Soon (Energy.AgWired.com)

GRASSLEY WANTS TO SEE TRUMP’S BIOFUELS PLAN IN WRITING BEFORE CELEBRATING (Brownfield Ag News)

TRUMP, OIL STATE SENATORS TALK BIOFUEL: (Politico's Morning Energy)

Kim Reynolds says ethanol meeting with Trump went 'great,' but 'the devil's in the details' (Des Moines Register)

TRUMP BACKING PLAN TO INCREASE BIOFUELS PRODUCTION (News Dakota)

Trump Invokes Taliban in Latest Negotiations on Biofuel Plan (Bloomberg)

'We are holding our breath': Midland farmers anxious over latest battle between ethanol, gas industries (Omaha World Herald)

Excerpt from DTN Progressive Farmer: Recent media reports outlining a possible agreement on the Renewable Fuel Standard may sound promising for the biofuels industry and agriculture, but Sen. Charles Grassley, R-Iowa, told agriculture journalists on Tuesday that he'll hold off celebrating just yet.

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However, the agreement could look much different after senators from oil-producing states meet at the White House, perhaps sometime this week.

"Before I would say the president's delivered, and since EPA is writing it, putting it on paper, I'm going to wait and see what EPA does," Grassley said.

"You know what I've said about EPA being a tool of big oil. I would speculate that the president's tired of dealing with this. He's more or less said so many times. Even back when we were in the White House talking about E15, it just seemed like he could never get to the bottom of the ethanol issue, or he couldn't satisfy both big oil and the farmers, and he was trying to do that. Maybe that's where he has some shortcomings trying to satisfy everybody."

Grassley said the administration presented a 13-point plan on the biofuels issue during a recent White House meeting he attended along with other lawmakers.

"We went in with a simpler plan that, if it comes out on paper the way that the White House seemed to agree with us, then I would say we have a win, win situation," Grassley said.

"A win for maybe even small refineries legitimately getting a waiver. It's something that ought to make sure that any waived gallons are put back in. So when the government says we're going to be allowed to use 15 billion gallons mixed with petroleum, it's going to be 15 billion gallons. Instead of like with these waivers it would have ended up being 13.6 [billion gallons]. The small refineries have a victory. They can get as many refineries waived that they want to get waived."

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Among the industries waiting for RFS resolution and relief is biodiesel. To this point the biodiesel industry has been largely shut out of the negotiations but is waiting to see what the White House will eventually propose.

"We're pleased the president has heard the outcry, primarily from the Midwest, both from biofuels producers and those in the ag industry, and is responding to that," said Kurt Kovarik, vice president of federal affairs for the National Biodiesel Board.

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Biodiesel industry leaders also pushed back on the argument by petroleum refiners that any increase in biodiesel volumes would have to be met by imports.

"That case simply isn't the truth," Keaveney said. "Investments are going forward in the United States and will go forward in the United States as long as there is a policy going forward and investors know what that is. We have the raw materials in the United States to continue to be a growing marketplace."

The petroleum industry and its backers on Capitol Hill have criticized USDA's involvement in negotiations, particularly USDA Deputy Secretary Steve Censky, who was the long-time CEO of the American Soybean Association before being nominated to his current post. Yet, former lobbyists and attorneys for the refining industry have found their way into EPA posts to influence the direction of the RFS.

"USDA has a role in agriculture, right? It's in the name," said Donnell Rehagen, CEO of the National Biodiesel Board. "It makes all the sense in the world that the president would rely on USDA to come to the conclusion that he should on policy decisions that affect agriculture and biodiesel."

Rehagen later said the biodiesel industry has been trying to have a conversation with EPA for several years about small-refinery exemptions and implementation of the RFS, but that hasn't happened.

REPORTED AGREEMENT

Trump reportedly has tentatively agreed to reallocating biofuel gallons lost to small-refinery exemptions to the RFS over a three-year period, starting in 2020.

A report by Bloomberg citing anonymous sources said Trump tentatively agreed to the action as part of a big package for the agriculture and ethanol industries, following a meeting last Thursday with Grassley and fellow Iowa Sen. Joni Ernst, as well as Iowa Gov. Kim Reynolds.

Reuters reported on Monday the plan would require the EPA to calculate a three-year rolling average of the total biofuels exempted since 2016 via small-refinery exemptions. The agency would then add the average to annual renewable volume obligations in the RFS.

In addition, the agreement also would include increasing 2020 RFS volumes by about 1 billion gallons. That would include 500 million for corn-based ethanol and 500 million gallons for biodiesel and other advanced biofuels. In 2016, the U.S. Court of Appeals for the District of Columbia Circuit ruled the EPA illegally cut RFS volumes by 500 million gallons.

In a letter to Trump last Thursday, a group of eight senators from oil-producing states said they remain opposed to reallocation.

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Grassley said that, based on his conversations with the administration, he believes Trump was surprised at rural America's reaction to the latest 31 waivers.

"So then he asked people close to agriculture and close to ethanol to respond to what he thought was a legitimate complaint, that he was hearing one thing from soybean people, another thing from corn people, another thing from ethanol, and ethanol industry has two or three different points of view, and with biodiesel," Grassley said.

"So you got different people pounding the president. He said, 'I need to know what the industry wants. So can you get the industry together?'"

All sides were brought to the table and within 48 hours came up with something that was presented to the president, Grassley said. READ MORE

Excerpt from Des Moines Register: U.S. Sen. Chuck Grassley says he won't be cheering a Trump administration biofuels fix until the Environmental Protection Agency has "put it on paper."

"I've been hoodwinked so many times, not just by the EPA on this issue, but by other bureaucracies as well, so I'm going to see if what we talked about is the end product," Grassley told reporters Tuesday.

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Grassley said President Donald Trump, Vice President Mike Pence and other administration officials "seemed to agree" with Midwest Republicans at a meeting last week that "any waived gallons are put back in."

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Biofuels plants across the country — including two in Iowa — have either closed or idled indefinitely because of mounting losses. Most U.S. plants have cut production and workers.

Grassley said the administration had a 13-point package for helping the ethanol industry, ....

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The industry hopes at least 1 billion gallons of ethanol are replaced annually.

But Trump and administration officials are expected to meet with congressional leaders representing oil-producing states this week.

"If it comes out on paper the way that the White House seemed to agree with us, then I would say we have a win-win situation," Grassley said.

EPA "can waive all the small refinery waivers" it wants, "just make sure we get 15 billion gallons," Grassley said, as outlined for corn-based ethanol under the federal mandate.

The waivers have sparked a rebellion in farm country, which has mostly backed the president during trade wars with China, Mexico and Canada.

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Grassley said Trump was shocked at how farmers and biofuels producers reacted to his administration's recent 31 ethanol exemptions.

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"He felt he couldn't satisfy both Big Oil and farmers. And he was trying to do that," Grassley said. "Maybe that's where he has some shortcomings, trying to satisfy everybody." READ MORE

Excerpt from Newsweek: Last week, the heads of 64 oil refineries penned a letter to the president urging him not to agree to farmers' demands.

The letter, seen by Newsweek, states: "We are deeply concerned...about recent reports that you intend to backtrack on your commitment to our industry, and most importantly, our workers by increasing federal government mandates for biofuels."

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In a statement to Newsweek, Thompson said: "Pursuing this plan jeopardizes the refining industry's support of the president and would undoubtedly raise fuel prices for consumers, neither of which would be good for the president going into next year's election."

Other unions representing blue-collar have urged the president not to change biofuel policy.

Among them are North America's Building Trade Unions (NABTU) as well as the International Brotherhood of Boilermakers, which represents industrial construction workers.

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The president will meet senators from energy states this week, on a day not yet finalized, as he seeks to perfect the political choreography required to keep both blue-collar workers and the rural sector on side.

The unhappiness within the rural sector appears to be increasing.

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Kelly Nieuwenhuis, Siouxland's board president, told the paper: "Unless something changes, the farmers I talk with will have a hard time supporting the president." READ MORE

Excerpt from Politico's Morning Energy: TRUMP, OIL STATE SENATORS TALK BIOFUEL: "The [Renewable Fuel Standard] is on par with trade in terms of the level of frustration," said Mark Watne, president of the North Dakota Farmers Union. "And some folks who initially supported the trade war are realizing that what's going on with China has nothing to do with agriculture."

Trump will meet with a group of oil state senators today to discuss changes to the RFS he is considering. Sens. Bill Cassidy and Pat Toomey said they'd be at the meeting, and Sen. Ted Cruz is also expected to attend. The group is expected to press the case that the administration should put a cap on the cost of compliance credits, called Renewable Identification Numbers.

The RIN cap proposal was one of the hopes of refiners in the last round of negotiations in early 2018, but biofuels groups oppose it and the oil industry itself is split on the idea, leading to its eventual rejection. None of those dynamics have changed in the intervening year. The White House has been considering a package that would boost biofuel blending requirements and limit the number of refineries that receive exemptions from the program, but Trump was unlikely to make an announcement before meeting with the oil state senators.

The last word: Trump is notorious for taking the advice of the last person to speak with him, and some biofuel groups worry that Trump will change the policy package after hearing from oil state senators. But Iowa Sen. Chuck Grassley, a biofuel champion, is more optimistic. "I shouldn't have to go back to the president and say anything more," he told reporters Wednesday. "If the president and the people advising him say we have a deal, we have a deal." READ MORE