‘Devil in the details’ on White House RFS meeting

Biofuel industry concerned about discussion of using RIN credits for exported ethanol.

Jacqui Fatka, Policy editor

May 9, 2018

4 Min Read
‘Devil in the details’ on White House RFS meeting

On Tuesday morning, President Donald Trump convened a meeting at the White House with Sens. Chuck Grassley (R., Iowa), Joni Ernst (R., Iowa), Ted Cruz (R., Texas) and Pat Toomey (R., Pa.), along with Environmental Protection Agency Administrator Scott Pruitt and Secretary of Agriculture Sonny Perdue, for yet another discussion on the Renewable Fuel Standard (RFS). As a result of the meeting, it appears consensus was reached regarding allowing the year-round use of E15 fuel blends, but as Grassley said, the “devil is in the details.”

The E15 agreement is seen as a positive step forward for the ethanol industry. “That’s good news for farmers and consumer choice at the pump. Allowing higher blends of ethanol to be sold in the summer months fits in well with EPA’s de-regulatory agenda,” Grassley said.

Brent Erickson, executive vice president of the Industrial & Environmental Section at the Biotechnology Innovation Organization (BIO), said ensuring that E15 can be sold year-round in states and regions where it is already approved will give advanced and cellulosic ethanol more opportunity to compete in the market in coming years.

“E15 reduces the price of gasoline by 5-15 cents/gal., and it lowers tailpipe and greenhouse gas (GHG) emissions all year around. A recent BIO analysis indicates that permitting current E15 sales to continue throughout the full year can reduce GHGs equivalent to taking 2.1 million vehicles off the road. Additionally, the Energy & Environmental Studies Institute finds that E15 can lower the public health impacts from transportation emissions, including reducing risks associated with cancer and asthma,” Erickson said.

Related:Perdue calls EPA’s actions ‘RFS demand destruction’

There was also an agreement to not pursue an artificial cap on renewable identification number (RIN) prices, “which would have destroyed demand for biofuels and hurt biofuels workers,” Grassley explained. However, there was discussion about counting RINs from exported renewable fuels to count toward an oil company’s RFS obligation.

“Depending on potential implementation, allowing exports to qualify for RFS compliance could dramatically reduce domestic ethanol demand while most certainly resulting in retaliatory trade barriers from the countries importing U.S. ethanol,” Renewable Fuels Assn. (RFA) president and chief executive officer Bob Dinneen said. “Our trade partners in the international market certainly would not understand why the lowest-priced ethanol in the world requires an export subsidy. The real disgrace with a proposal of this nature, however, is that ethanol producers and farmers would bear the brunt of any retaliatory tariffs; they would be subsidizing highly profitable oil companies, who would benefit from the reduced RIN costs. In no way will that ever be acceptable or considered a win for our industry.”

Related:INSIDE WASHINGTON: Cries for RFS accountability getting louder

Emily Skor, CEO of Growthy Energy, added, “Attaching a RIN to ethanol exports would have a crippling impact on American agriculture, significantly reducing demand for ethanol and corn. ... Further, export RINs would be a clear violation of the RFS, which is intended to increase the domestic use of biofuels.”

Erickson also expressed concern about the impact counting RINs from exported renewable fuels would have on the development of advanced biofuels.

North Dakota farmer Kevin Skunes, president of the National Corn Growers Assn. (NCGA), noted that EPA stated last fall that it would not pursue RIN credits on exports. “Pursuing a path that includes RIN credits on export gallons would violate the letter and spirit of the RFS, serving the interests of oil refiners who have already benefited from Administrator Pruitt’s unprecedented RFS volume waivers at the further expense of America’s farmers,” Skunes said.

Grassley said he told the President and Pruitt that EPA granting "hardship" waivers for billionaires is hurting biofuels and undermining the RFS. They also undercut the President’s commitment to meet the annual 15 billion gal. volume obligation set by Congress under the RFS.

Kyle Gilley, POET senior vice president of external affairs and communications, stated, "We are pleased President Trump has vowed to cut the unnecessary red tape holding back the rural economy and stop Mr. Pruitt’s rampant abuse of hardship waivers for refiners at the expense of American-made biofuels. It’s clear the President recognizes the many benefits of year-round sales of E15 for consumers and for farmers who are suffering and facing new threats from trade wars overseas.”

Grassley explained that there was discussion about how to reallocate the waived obligations so that demand for biofuels wouldn’t be hurt. “While details weren’t decided, I look forward to reviewing a plan being developed by Secretary Perdue and Administrator Pruitt. Any fix can’t hurt domestic biofuels production,” he emphasized.

“President Trump also tasked (the U.S. Department of Agriculture) and EPA with re-examining the destructive waivers granted to major refiners under the RFS. Cruz seems to think export RINs could fill the void left by EPA actions, but it won’t take long for stakeholders to realize that his solution would only dig the hole deeper and likely drag down the entire rural economy,” said Brooke Coleman, executive director of the Advanced Biofuels Business Council.

About the Author(s)

Jacqui Fatka

Policy editor, Farm Futures

Jacqui Fatka grew up on a diversified livestock and grain farm in southwest Iowa and graduated from Iowa State University with a bachelor’s degree in journalism and mass communications, with a minor in agriculture education, in 2003. She’s been writing for agricultural audiences ever since. In college, she interned with Wallaces Farmer and cultivated her love of ag policy during an internship with the Iowa Pork Producers Association, working in Sen. Chuck Grassley’s Capitol Hill press office. In 2003, she started full time for Farm Progress companies’ state and regional publications as the e-content editor, and became Farm Futures’ policy editor in 2004. A few years later, she began covering grain and biofuels markets for the weekly newspaper Feedstuffs. As the current policy editor for Farm Progress, she covers the ongoing developments in ag policy, trade, regulations and court rulings. Fatka also serves as the interim executive secretary-treasurer for the North American Agricultural Journalists. She lives on a small acreage in central Ohio with her husband and three children.

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