Government

Deal on renewable fuels begins to emerge

But idea of counting ethanol exports toward goal raises worry

Sen. Chuck Grassley, R-Iowa. (Stephen Mally/The Gazette)
Sen. Chuck Grassley, R-Iowa. (Stephen Mally/The Gazette)
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After months of fractious negotiations between Big Oil and King Corn over renewable fuels, President Donald Trump framed the outline of a deal Tuesday that appears to give farm state politicians much — but not all — of what they’ve been seeking.

The president reiterated support for expanding the sales of higher ethanol blends of gasoline and backed away from a proposal to cap the price of credits called RINs that refiners must acquire and turn into the government each year to prove compliance with the biofuels quotas.

But he also told a group of senators he’s considering allowing exported ethanol to count toward the volumes mandated under the nation’s biofuels law — a move he intended to appease both sides by cutting the refiners’ costs while preserving demand for corn-based ethanol.

“Devil in details,” wrote Sen. Chuck Grassley, the Iowa Republican, on Twitter after attending the meeting.

The proposed changes follow years of hardball posturing and negotiations over the Renewable Fuel Standard, a law passed by Congress that requires biofuels be added to gasoline and diesel to help farmers and reduce the nation’s need for oil imports.

Refiners have increasingly complained the regulation was costing them a fortune, even driving them into bankruptcy.

Leading up to Iowa’s first-in-the nation presidential caucuses in 2016, then-Gov. Terry Branstad urged Iowa Republicans to turn away from candidate Sen. Ted Cruz of Texas for not supporting the fuel standard. Trump, appearing before the Iowa Renewable Fuels Association, spoke in favor of the law and his desire to expand it.

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“We are with you, folks, and have been with you since Day 1,” candidate Trump said then.

Even so, farm state interests had the jitters over his administration’s commitment to the renewable fuel law, considering some his key appointments opposed it.

Such concerns continue today, including worries expressed more bluntly than Grassley’s.

“Offering (blending) credits, which are supposed to be derived from a domestic renewable fuel use, for ethanol exports would threaten trade markets and impact corn farmers’ economic livelihoods,” said a statement from Kevin Skunes, president of the National Corn Growers Association.

Cruz, who long has been calling the question on renewables, also attended the meeting, as did Sen. Joni Ernst, R-Iowa; Sen. Pat Toomey, R-Pennsylvania; Environmental Protection Agency Administrator Scott Pruitt and Agriculture Secretary Sonny Perdue.

Cruz characterized the summit as a victory for the refining industry and for corn growers.

“More corn will be sold (good for farmers), plus lower RINs (saves blue-collar refinery jobs), plus more ethanol exports (good for America),” he tweeted.

Reuters, citing sources it did not name, reported the export plan emerged from discussions about the Trump administration’s expanded use of hardship waivers for small refineries.

The waivers exempt them from obligations under the fuel standard. Industry experts say waivers provided by Trump’s EPA have taken a big chunk out the $15 billion RIN market.

Senators concerned about the use of waivers wanted to know how the administration planned on making up, or reallocating, the lost credits.

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A plan to attach RINs to exports was offered as a solution, Reuters reported. A proposal to allow exported ethanol and other biofuels to generate the tradable credits was floated last year by the Trump administration, but was shot down by the corn lobby.

The oil industry, at the same time, has expressed opposition to expanding the sale of gasoline containing 15 percent ethanol, known as E15, mainly on the grounds that it cuts into petroleum’s share of the market.

The EPA currently bans the higher ethanol blend during summer because of concerns it contributes to smog.

“Allowing higher blends of ethanol to be sold in the summer months fits in well with EPA’s deregulatory agenda,” Grassley said in a statement.

Gasoline typically contains 10 percent ethanol.

Reuters contributed to this report.

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