In an effort to mend fences with the powerful corn lobby, the Trump administration unveiled the draft of a new formula Tuesday to boost biofuels demand — but the proposal instead provoked only more consternation from the industry.
Corn and soybean farmers are angry that Trump’s Environmental Protection Agency has greatly expanded the number of waivers it gives to small refineries to exempt them from complying with the nation’s renewable fuel policy. Moreover, some of the waivers have gone to refineries operated by oil industry giants Exxon Mobil and Chevron, raising questions about whether they truly had financial hardships in complying with the rule.
In response to arguments from the renewable fuel industry that these waivers reduce demand, Trump said less than two weeks ago a new rule on blending biofuels into the nation’s gas and diesel supply would make up for it.
But when that proposed rule came out Tuesday, renewable fuel interests didn’t see that promise in there.
“Only 11 days after President Trump’s landmark announcement, the EPA proposal reneges on the core principle of the deal,” Iowa Renewable Fuels Association Executive Director Monte Shaw said in a statement. “Instead of standing by President Trump’s transparent and accountable deal, EPA is proposing to use heretofore secret (Department of Energy) recommendations that EPA doesn’t have to follow.”
The new rule bases the biofuels volumes that will be required for blending only on estimates from the U.S. Energy Department — rather than the actual exemptions themselves.
The rule’s publication Tuesday kicked off a 30-day public comment period that farm state politicians urged be used to force a rewrite.
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“President Trump promised 15 billion gallons of renewable fuel blended per year, and I will work to hold the EPA accountable to ensure that promise is kept,” Republican Gov. Kim Reynolds said in a statement. “I understand the biofuel industry’s frustration and distrust following the EPA’s announcement today. The next 30 day comment period is crucial to making sure the EPA follows through on the President’s commitment.”
Iowa’s Republican senators, who have been deeply involved in lobbying the White House on the issue, expressed faith that the administration’s own EPA would uphold President Donald Trump’s word.
“The ethanol and biodiesel industries have a lot of cause to distrust EPA and that is understandable,” said a statement from U.S. Sen. Chuck Grassley. “But President Trump brokered this deal and any attempt to undermine it from EPA would represent a betrayal of the president. I expect EPA would not do that after all the work that’s gone into this issue.”
U.S. Sen. Joni Ernst said in a statement she’ll “continue to hold EPA accountable and ensure Iowans’ voices are being heard, loud and clear.”
Farmers who supported Trump heavily in his 2016 campaign have been frustrated with this, along with the ongoing U.S.-China trade war.
Trump promised in early October to boost demand for fuels like corn-based ethanol. During the negotiations, it appeared the biofuels industry had won a concession that would require refiners who are not exempt from the rules to blend the additional gallons of ethanol and other fuels that smaller facilities did not have to.
But the proposed plan would calculate the volume of biofuels U.S. refiners have to blend by using a three-year average of exempted gallons as recommended by the Department of Energy, the EPA said.
“The supplemental notice contains a never-before-discussed proposal to estimate small refinery exemptions, with no assurance that the estimate will come close to actual exemptions,” the National Biodiesel Board said in a statement.
Oil companies were not happy, either, but for very different reasons.
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They consistently have resisted measures to expand the biofuels market, which they view as a competitor.
Refiners complain that the requirements under the nation’s renewable-fuel standard cost them greatly, and that having refiners make up for those who are granted exemptions would be an additional harm.
“There is simply no logic in forcing complying refineries to bear the burden of decisions outside of their control,” said Frank Macchiarola, an executive with the American Petroleum Institute.
Reuters and Rod Boshart from The Gazette Des Moines Bureau contributed to this report.