With the patience of farmers and Midwest lawmakers growing thin going into next year’s election, the Trump administration announced a plan Friday promising to boost biofuels demand.
The Environmental Protection Agency and U.S. Department of Agriculture released the proposed plan that had the president walking a fine political line with farmers and oil companies.
The plan aims to pacify farmers who, on the heels of years of low commodities prices, have been hit with the fallout from Trump’s tariff wars and declining ethanol demand largely attributed to blending exemptions given to refiners.
In August, the EPA granted an additional 31 refinery waivers that freed the businesses from their obligation under the Renewable Fuel Standard to blend ethanol into their gasoline.
The RFS determines how many gallons of ethanol and biodiesel refiners must blend into the nation’s fuel supply annually. That number is now set at 15 billion gallons of ethanol, but the waivers have eaten away at that target.
The exemptions were to be given only to small refineries that could prove they were in serious financial trouble, but since Trump has been in office, the number of waivers granted — 85 — has increased by more than four times. Oil companies, including giants such as Exxon Mobil and Chevron, have saved millions while farmers have watched ethanol demand plummet.
Since the waivers announcement in August, ethanol production dropped to its lowest rate since April 2016. Farm lobbyists estimate that the waivers have claimed about 1.4 billion bushels of corn targeted for ethanol and 825 million bushels of soybeans that had been used for biodiesel production. Nearly 40 percent of the corn produced nationwide is now used by the ethanol industry.
The EPA won’t officially propose the changes until next week. Its goal is to devise a system for fairly determining how much ethanol and biodiesel production has been lost to the waivers.
The agency plans to seek the public’s input on how to make sure 15 billion gallons of ethanol are actually put into the nation’s fuel supply beginning next year. Provisions would also be included for hitting biodiesel targets.
A win-win, president says
Trump touted the new plan as a win-win for ag and big oil. The ethanol-blending exemptions for refiners will remain, but if all goes according to plan, it will be offset by higher blending requirements.
The president, through Twitter, had alluded to good news on the horizon for the ethanol industry in August, as criticism was building on the heels of the waiver announcement.
“The Farmers are going to be so happy when they see what we are doing for Ethanol, not even including the E-15, year around, which is already done. It will be a giant package, get ready! At the same time I was able to save the small refineries from certain closing. Great for all!,” Trump tweeted on Aug. 29.
Refiners, however, are already threatening to take legal action, saying the changes will also hurt manufacturers and consumers.
U.S. Rep. Cheri Bustos, D-East Moline, a member of the House Agriculture Committee, said the plan was devised to make up for the administration’s previous actions to undermine the RFS and the nation’s agriculture economy. She was a harsh critic of the exemptions announcement that came down in August.
“I welcome the administration’s announced commitment to start fixing their own harmful biofuels policies. The small refinery waivers have directly hurt producers in Illinois by further reducing already depressed demand,” Bustos said in a news release.
The waiver exemptions, like the trade war, was another instance of the administration’s self-inflicted pain that must now be remedied, Bustos said. While the congresswoman was upbeat about the EPA’s proposed measures, she isn’t yet convinced it will make up for the harm done to Midwest farmers. She called for vigilance in making sure the EPA lives up to its commitments in a timely fashion.
“While the steps announced today move us in a better direction, the details, which are still months away, will truly determine if these steps will be enough to provide relief for the harm the administration has caused,” Bustos said.
On the other side of the aisle, U.S. Rep. Adam Kinzinger, R-Channahon, called the announcement great news for the 16th Congressional District.
“I’ve been fighting for years to diversify our energy resources, especially with ethanol. I’m glad to see the president fulfill his promise to the biofuels industry and I look forward to the finalization of these much needed mandates,” Kinzinger said.
The EPA has said it will file official changes to the biofuels requirements by Nov. 30.