Has President Donald Trump turned a 180 on his publicly stated support for ethanol and the Renewable Fuel Standard?
It’s a question ethanol and agriculture industry officials are asking after reports surfaced this week that EPA’s decision late last week to grant 31 additional small-refinery waivers to the RFS for 2018 came from the top — via a call from Trump himself to EPA Administrator Andrew Wheeler.
The president sided with oil refiners over ethanol producers and corn farmers, just two months after reiterating his support for ethanol at a rally held at Southwest Iowa Renewable Energy in Council Bluffs, Iowa, to celebrate the approval of year-round E15 sales.
Trump essentially ended what was an ongoing review of the waivers program, leading biofuels interest groups to question whether the administration changed course on its biofuels policy.
Dating back to 2016, Trump’s EPA has granted 85 waivers totaling 4.03 billion ethanol-equivalent gallons. That means those gallons were not blended with gasoline and small refiners are not required to buy biofuels credits to comply either.
Based on DTN’s reporting, the president’s actions closely match what at least some ethanol interest groups heard last week in regards to the EPA announcement.
“It’s something I was told by a contact last Friday when the exemptions came out,” American Coalition for Ethanol Chief Executive Officer Brian Jennings told DTN.
“I guess it shouldn’t surprise anyone.”
Citing three unnamed sources, Reuters reported Friday morning that last week’s late-Friday decision from EPA started with a phone call from Trump to Wheeler, and the president has “heard from all sides and in the end he has had enough of it.”
Read that article here: https://www.reuters.com/…
Just days before EPA announced the latest round of small-refinery exemptions, U.S. Secretary of Agriculture Sonny Perdue said talks about the exemptions still were ongoing.
EPA responded to DTN’s request for more information on the decision by sending a copy of the agency’s statement from last Friday. That statement provided no details as to the rationale behind the decision, nor did it announce the Trump-ordered review was complete.
USDA did not respond to DTN’s request for comment.
Renewable Fuels Association President and Chief Executive Officer Geoff Cooper said as a guest on Adams on Agriculture’s radio program on Friday that the president continues to send mixed signals.
The industry as a whole does not have a problem with the EPA granting waivers to refiners who face true economic hardship, he said, so long as the agency reallocates gallons lost to waivers to other blenders and obligated parties.
As recently as 2013 and 2014, the EPA had been reallocating gallons. That changed, however, starting in 2016. The agency has not reallocated gallons lost to waivers under the Trump administration.
At this juncture, the ethanol industry is down to convincing courts that the EPA’s actions are unlawful. There are a number of court cases challenging the agency.
Cooper said Trump’s visit to the Iowa ethanol plant early in June had provided a level of comfort that his administration would examine the issue more closely.
“He heard directly from famers when he was there,” Cooper said. “He heard from workers at the ethanol plant about the negative impacts of these exemptions, and what it was doing to our marketplace, and he looked at said ‘Hey I’m going to look into this, I hear you.’
“We were surprised. We were shocked and extremely disappointed on Friday when EPA rushed out these additional 31 exemptions. Just the way that it was done kind of last minute on a Friday afternoon in August just added insult to injury.”
And, about the report that Trump ordered the action? “If that’s true then that’s a huge disappointment and really we can no longer point a finger at a rogue EPA on these waivers if the president himself is personally involved in making these decisions. Then this falls squarely on him.”
‘A BODY BLOW’
National Corn Growers Association Chief Executive Officer John Doggett told DTN in an interview his group will continue to tell the White House how waivers hurt family farmers and ethanol producers.
“It was a surprise, and not a good surprise,” Doggett said. “We had gotten the president’s attention about how important the continued issuance of these waivers and this continued demand destruction we have all across the corn industry, whether it’s trade or ethanol. This was a body blow. This wasn’t a glancing blow, this was a body blow.”
Tom Hitchcock, chief executive officer of the 62-million-gallon Redfield Energy LLC, ethanol plant in Redfield, South Dakota, told DTN the oil industry and allies cannot logically keep arguing that waivers do not lower ethanol use.
“You got big oil and EPA on one side, and corn farmers and ethanol plants on the other side,” Hitchcock said. In adding up 4 billion gallons of small-refinery exemptions without reallocating the volume, Hitchcock said, “How can anybody sit there and tell you that’s not a negative in demand for the ethanol industry?”
Hitchcock said the ethanol industry overall is hurting. “All I can say is thank goodness for the bankers having some tolerance,” he said.
With exemptions going to refiners producing 75,000 barrels of oil or less every day, Hitchcock said the smallest refineries are larger than the biggest ethanol plants. At 75,000 barrels, those refiners are producing 3.1 million gallons a day.
ACE’s Jennings told DTN, “We’re exasperated.”
He said the industry has been “tippy-toeing” around the small-refinery exemptions, largely because farmers have continued to show strong support for President Trump. As he indicated in a speech Thursday, Jennings pointed out that if EPA under Hillary Clinton had granted these exemptions the ethanol industry and farmers would be livid.
“Rural America wouldn’t be turning the other cheek. We would be pissed off and we would be raising Cain,” Jennings said. “But we turn the other cheek when it is the Trump EPA.”
While refineries receive exemptions because of claims of economic hardship, the ethanol industry has been struggling financially for at least a year, Jennings said. The waivers come with losses in export markets because of trade disputes.
“Margins really started thinning out in the industry in the summer of 2018 and things got ugly for a lot of plants last fall,” Jennings said. “Some of the most efficient plants are eking out a profit today, but most plants are not.”
Jennings said most ethanol plants have survived because of low debt and good capital reserves built up over time. “How much cash do we have to burn waiting for the RFS mismanagement to get fixed?” he asked.
Ethanol still has advantages over gasoline because of high octane and the ability to continue lowering the industry’s carbon footprint, Jennings said. ACE and its board have decided to keep defending the RFS and pursue litigation while working with states to draft low-carbon standards and see what kind of legislation can be crafted at the federal level.
Growth Energy Chief Executive Officer Emily Skor said in a statement to DTN the president’s actions come at a difficult time for ethanol and agriculture.
“If true, this report is deeply concerning,” she said.
“These exemptions are destroying demand for homegrown energy at a time when family farms are struggling, farm income is plummeting and many ethanol plants have been forced to close their doors or idle production. The impact on rural communities cannot be overstated. This administration must uphold the integrity of the Renewable Fuel Standard as the law requires, or else the president’s promises to rural America will be broken.”
Just days after Trump’s reported decision on small-refinery waivers, he visited a petrochemical complex under construction in Pennsylvania, drawing the ire of Sen. Charles Grassley, R-Iowa.
See that story here: https://pittsburgh.cbslocal.com/…
During a call with agriculture journalists on Tuesday, Grassley was stunned to learn Trump was speaking at a Shell petrochemical company about growth in the oil and natural gas industries.
Todd Neeley can be reached at firstname.lastname@example.org
Follow him on Twitter @toddneeleyDTN
Chris Clayton can be reached at email@example.com
Follow him on Twitter @ChrisClaytonDTN
Source: Todd Neeley and Chris Clayton, DTN
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