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Trump Rebuffs Corn Farmers With Status Quo on Biofuels

  • Thursday, 19 December 2019 13:04


December 2019

By Jennifer Dlouhy

The Trump administration on Thursday set relatively flat quotas for plant-based fuels in 2020, rebuffing ethanol and biodiesel allies who said the targets don’t do enough to support the industry.

The Environmental Protection Agency will require refiners to use 20.09 billion gallons of renewable fuel in 2020, a 0.85% increase over the 2019 requirement for 19.92 billion gallons, largely tracking a proposal released in July. The agency is also sticking with its plan for adjusting blending requirements to offset waivers exempting some refineries from the mandates, despite criticism from biofuel allies in politically important farm states that the approach is inadequate.

EPA officials say that with those adjustments, the agency’s plan effectively lays out a 2020 target for 15.8 billion gallons of conventional renewable fuels, including corn-based ethanol, with that translating to 15 billion gallons once refinery waivers are factored in. A senior EPA official said the strategy allows the agency to better ensure targets are actually met while still giving small refineries relief from the requirements when appropriate.

“President Trump committed to our nation’s farmers that biofuel requirements would be expanded in 2020,” EPA Administrator Andrew Wheeler said in a news release. “At the EPA, we are delivering on that promise and ensuring a net of 15 billion gallons of conventional biofuel are blended into the nation’s fuel supply.”

Shares in biofuel producer Pacific Ethanol Inc. pared gains after the announcement, as did corn futures in Chicago.

Under the EPA rule, refiners are expected to use 5.09 billion gallons of advanced biofuel, including 590 million gallons of cellulosic biofuel. And in 2021, refiners and fuel importers will be required to use 2.43 billion gallons of biomass-based diesel made from soybeans and waste cooking oil -- identical to the 2020 target.

For weeks, biofuel producers, farmers and politicians from the U.S. Midwest unsuccessfully implored administration officials -- including President Donald Trump himself -- to alter the EPA’s approach so that it better assures biofuel quotas aren’t undermined by refinery waivers. They say the EPA measure falls short by basing adjustments on a three-year average of Energy Department recommendations on those refinery waivers -- rather than the higher number the EPA has actually granted.

“EPA is playing games and not helping President Trump with farmers,” said Senator Chuck Grassley, a Republican from Iowa. “No matter what EPA says about the impact of its waivers to oil companies making billions in profits, farmers and biofuels producers know and feel the negative impact of the agency’s actions.”

The EPA plan left both sides unhappy Thursday. In addition to the refinery waiver change, biofuel boosters had unsuccessfully sought more aggressive quotas to drive production. Meanwhile, oil companies broadly argued the measure will spur imports of foreign biofuel and complained the EPA’s reallocation plan forces larger refineries to bear an unfair burden as blending requirements are raised for those non-exempted facilities.

Oil industry leaders vowed to challenge the rule in federal court, with the American Fuel and Petrochemical Manufacturers calling the measure an “unprecedented overreach.” “There is no basis to consider forcing non-exempt refineries to subsidize their competitors,” the group said in an emailed statement.

The EPA said it will more closely adhere to Energy Department recommendations for refinery exemptions in the future, and a senior EPA official told reporters the agency will demonstrate that commitment with the next batch of waiver decisions, expected in early 2020.

But Senator Joni Ernst, a Republican from Iowa, stressed that voters in her state are hesitant “to trust the word of EPA to actually follow through on that commitment,” even though “President Trump wants to do right for the biofuels community.”

Biofuel advocates demonstrated their skepticism Thursday. The National Corn Growers Association said farmers were “underwhelmed” by the final rule, because of the risk future refinery waivers will exceed the EPA’s adjustments. And the National Biodiesel Board said the EPA’s approach “does not provide assurance to the biodiesel and renewable diesel market” because “there is nothing in today’s rule to ensure that the agency will get these exemptions under control.”

The National Farmers Union accused Trump of breaking his “promise to rural America,” with group vice president Rob Larew saying the administration wasn’t doing enough to “make amends” for years of refinery waivers.

Other biodiesel leaders struck a more hopeful tone, still buoyed by an agreement between the White House and Congress to retroactively renew a lapsed $1-per-gallon tax credit that helps the fuel compete against petroleum-based diesel. Gene Gebolys, chief executive of biodiesel producer World Energy Alternatives LLC, said he was encouraged “the president now recognizes the damage done and has committed to stopping it from happening again.”

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