Ethanol industry preps for influencing Trump admin

  • At a regional ethanol summit in Des Moines last week, the president of a top ethanol group said the industry is “hurting but hopeful” after 2018.
  • This is largely due to the fact that the EPA under Trump has dramatically expanded waivers for small refineries, which exempt them from complying with the Renewable Fuel Standard.
  • To appease the corn lobby, Trump directed the EPA to draft a rule allowing sales of higher ethanol gasoline blends year round, despite concerns that it would contribute to smog.

The oil and ethanol industries are poised to clash this year as the Environmental Protection Agency under the Trump administration moves to finalize rules for the Renewable Fuel Standard (RFS), which requires oil refiners to blend a significant percentage of biofuels — largely ethanol — into the products they sell or to buy credits from other companies to make up for falling short of the mark.

Given the nature of the two industries, some degree of antagonism is unavoidable. The mandate requires the oil industry to blend billions of gallons of corn ethanol in gasoline at the cost of billions of dollars. It came as no surprise, then, that a report earlier this month from the American Petroleum Institute claimed the ethanol mandate is “outdated and broken” and places consumers at risk by harming car engines, and should therefore either be “significantly overhauled” or eliminated entirely.

In response, Geoff Cooper, head of the Renewable Fuels Association (the ethanol industry’s top trade group), said the “Renewable Fuel Standard has been an unmitigated success, helping to clean the air, boost rural economies, lower fuel prices, and break up the oil industry’s near monopoly at the pump.”

This year the conflict has begun to grow exceptionally heated after the president failed to work out a deal between the industries to cut the cost of complying with the federal program. The EPA under the Trump administration has dramatically expanded waivers for small refineries, which exempt them from complying with the RFS if they can prove it would cause financial strain.

To appease the corn lobby, Trump directed the EPA to draft a rule that would allow sales of higher ethanol gasoline blends called E15 year round. Such fuel blends, which could be as high as 15 percent ethanol, are currently restricted during the summer due to concerns they contribute to smog. The rule has yet to be rolled out.

At the 2019 Iowa Renewable Fuels Summit earlier this week, Iowa Renewable Fuels Association Executive Director Monte Shaw said that 2018 was his toughest year ever working in the industry. He summarized the state of the biofuels industry overall as “hurting but hopeful” — and ready to fight for its life.

“You know, 2019 is going to be a crazy year,” Shaw told the Washington Examiner ahead of the summit, alluding to a number of lawsuits both anticipated and pending over the RFS, as well as the push to allow more ethanol in gasoline year-round.

He warned the agency that “it will be war” if it does not comply with a federal court order directing the EPA to raise its annual ethanol targets by 500 million gallons to make up for a two-year period when the Obama administration moved to to lower the annual requirements.

The EPA said it will fulfill the court order with a so-called “reset rule” that it will propose shortly, but the ethanol industry is still worried  the agency will find a way to avoid making up the difference.

As for the rule to allow 15 percent blends of ethanol during the summer, Shaw anticipates major pushback and even lawsuits from refiners and the oil industry, but he’s eager to see the EPA roll it out.

Regardless of how these policies shake out in 2019, the debate over the long-term viability of RFS and the use of biofuels in general won’t be going away any time soon.

“It takes just about as much energy to grow the input crops for and then refine ethanol as you get from burning it in a car’s engine,” wrote Joshua Rhodes, a Research Associate at the Energy Institute and the Webber Energy Group at the University of Texas at Austin, in Forbes last year. “In an era of increased domestic oil production (and increasing vehicle electrification) it feels somewhat like holding on to an inferior technology.”

This leaves politicians — especially the present GOP administration — in a bind, said Rhodes, because “1) farmers love corn ethanol because it keeps commodity prices higher, 2) many rural districts are Republican, and 3) if Republicans are seen as anti-farm, they will have trouble winning elections.”

Image Credit: “Cornfields” by chrisinphilly5448 is licensed under CC BY-SA 2.0

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