Farm groups united ahead of White House RFS meetingFarm groups united ahead of White House RFS meeting
White House meeting on Tuesday could call for administrative changes to biofuel mandate program.
February 26, 2018
Ahead of a Tuesday White House meeting on the Renewable Fuel Standard (RFS), farm and biofuel groups are urging President Donald Trump to avoid seeking changes that would weaken the nation’s biofuel policy.
The meeting will bring together key lawmakers and Cabinet officials -- including Agriculture Secretary Sonny Perdue and Environmental Protection Agency Administrator Scott Pruitt -- to discuss escalating tensions over the RFS between oil industry and ethanol industry interests.
Sen. Ted Cruz (R., Texas) has taken on Midwest senators in seeking changes to the RFS and has used the recent bankruptcy of Philadelphia Energy Services (PES) as the poster child of what happens if the government doesn’t do something to control RFS compliance costs.
Recent claims from the East Coast refiner that the RFS caused it to file for bankruptcy initiated the most recent round of tensions and, therefore, the Tuesday meeting at the White House. The industry letter noted that these claims “are not reflective of the state of the refining industry but, rather, the hallmark of poor business decisions and a willingness to put investor returns before refinery jobs.”
“Mismanagement of a single refinery should not be used as an excuse for undoing 10 years of sound policy,” National Corn Growers Assn. president Kevin Skunes said.
“Despite the claims of adverse impacts from renewable identification number (RIN) costs, last November, the Environmental Protection Agency concluded that RIN values are not causing economic harm to refiners,” the letter said. “The failings of one company should not be used as an excuse for undermining a law that serves hundreds of ethanol and biodiesel plants, tens of thousands of renewable fuel plant workers and millions of farmers who rely upon the strong market demand created by the RFS.”
The letter noted that there are options to address refiners’ concerns without undercutting the RFS. “Any action that seeks to weaken the RFS for the benefit of a handful of refiners will, by extension, be borne on the backs of our farmers,” the groups concluded.
Reports indicate that some of the current proposals on the table include capping the price of biofuel credits (called RINs), a year-round waiver for the sale of 15% ethanol gasoline, the creation of credits for exported ethanol and a transparency measure intended to cut Wall Street investors out of trading in the program.
Those in the biofuel industry do not support a cap on RIN prices, but would support the waiver for year-round E15 sales and increased transparency.
Growth Energy chief executive officer Emily Skor said refinery owners are circulating the “same old wish list,” but she did not expect their proposals to fly with the President, who consistently has voiced support for a strong RFS.
“We believe the president and his Administration will keep their commitment to renewable fuels and rural America and focus on the facts. The problems facing PES are not caused by RINs or the RFS. Sen. Cruz’s plans only help a few wealthy investors like the Carlyle Group, which squandered their last taxpayer bailout and raided corporate funds at the expense of local workers in Philadelphia (Pa.). We’re going to focus on policies that protect jobs, including hundreds of thousands of workers in states like Iowa, Michigan, Ohio and Wisconsin,” Skor said.
Brooke Coleman, executive director of the Advanced Biofuels Business Council, said, “No one wants local workers to pay the price for the vulture capitalists who drained PES of its capital and resources, including rural champions on Capitol Hill and in the Oval Office, but a few oil refineries like Valero and PBF are trying to hijack that conversation, despite surging profits and a massive windfall under the President’s tax plan. The White House is not going to fall for that, and President Trump’s team has been very clear to Midwest lawmakers that they will not betray the President’s commitment to rural workers and farmers. The simple truth is that undermining the RFS might benefit the Carlyle Group and Ted Cruz, but it does nothing for workers, so any efforts on PES should focus on Philadelphia jobs, not gutting the market for biofuels.”
Skunes added, “There is a win-win here, but it means following the intent of the RFS and increasing the supply of RINs through regulatory parity for E15 and higher blends of ethanol to lower values, as well as bringing more transparency to the trading system.”
Renewable Fuels Assn. president and CEO Bob Dinneen said, “Any effort to reform or repeal the RFS that is founded on the premise of demand destruction is a non-starter.”
National Farmers Union president Roger Johnson explained that Trump and his Administration have expressed strong support for the RFS since the early days of his campaign. “We want to be sure he remembers these promises he made to farmers and rural communities as he meets with senior Administration officials and lawmakers. Rural communities are under a lot of economic stress, so there is much to gain from a strong RFS, and a lot to lose by weakening it,” Johnson said.
The farm groups’ letter is drawing attention to the dire state of the farm economy. The U.S. Department of Agriculture projects that 2018 net farm income will decline $4.3 billion, a 6.7% reduction from 2017 levels. This represents a 50% decline in net farm income since 2013. “The heart of America is being left behind when it comes to economic growth and opportunity,” the groups said.
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