Ethanol, Corn Groups Say EPA Changes Could Be Devastating for Rural America03/12/2018
Trade groups for the corn and ethanol industries are sounding the alarm bells on an ethanol proposal they say would result in billions in losses for grain farmers in the Midwest.
At issue is a pitch from Sen. Ted Cruz, R-Texas, to allow the sale of higher ethanol blends year-round in exchange for a cap on the cost of the renewable fuels credits used by refiners and merchants to hit federal renewable fuel targets.
Cruz wants to see a 10-cent cap on the tradable Renewable Identification Numbers (RIN), which are affixed to batches of ethanol.
Refiners can either blend ethanol into their fuels or buy credits from those who do to hit the Renewable Fuels Standard targets enforced by the Environmental Protection Agency.
Cruz and other oil state lawmakers argue that the RIN price – which sat around 70 cents a gallon last year but has dropped this year – is too high and that the current RFS rules amount to the Environmental Protection Agency picking winners and losers in the energy market.
A 10-cent cap would be disastrous for farm states like South Dakota, said Lisa Richardson of the South Dakota Corn Utilization Council.
The ethanol industry is the number one buyer of corn in the state, Richardson said. Citing research from Iowa State University and the University of Illinois, she pointed to a loss of 25 cents per bushel for corn under a 10-cent RIN cap. Soybeans would lose 16 cents a bushel, she said.
“That could be upwards of $30 to $40 an acre for our (corn) farmers,” Richardson said.
That would come on top of already-low prices and a record carryover crop. In all, the cap could cost rural America’s corn farmers up to $4 billion, she said, cancelling out the value of higher ethanol blends.
“This would hit rural America in the gut,” Richardson said.
The idea of tying higher blends to a RIN cost cap has gained traction in recent months, however.
Politico reported late last year that Cruz and Utah Sen. Mike Lee withheld support for a Department of Agriculture cabinet nominee Bill Northey to force a meeting on the issue.
Cruz has since met with President Donald Trump, and Northey’s appointment has been approved. EPA Administrator Scott Pruitt and USDA Secretary Sonny Perdue met with the president again late last month in an effort to hammer out a compromise.
Brian Jennings, of the South Dakota-based American Coalition for Ethanol, said he expects an announcement on a possible rule as soon as next week.
The proposal would come through the EPA’s rulemaking process, which is open for public comment but not open for a vote by Congress. Jennings and Richardson hope South Dakota’s farmers and its elected officials will pressure President Trump to reject caps.
“We are sounding every alarm we can at this point,” Jennings said.
Rep. Kristi Noem was one of four Representatives to sign a letter to President Trump on Friday urging him to reject a RIN cap.
Sen. John Thune signed a letter to the President in January similar to the one offered by Noem. It noted that the EPA’s own official position is that “high RIN prices do not cause significant harm to refiners.”
“My Senate colleagues and I have been very clear with the administration that a RIN cap or waiver would undermine the RFS and be a significant blow to agriculture during an already challenging time,” Thune said Friday. “We have offered tenable solutions, such as extending E15 sales year-round, which would drive down RIN prices and uphold the president’s commitment to the RFS.”
Source: Sioux Falls Argus Leader