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Trump: E15 Year-Round, Find Waivers Fix | KTIC Radio

Trump: E15 Year-Round, Find Waivers Fix

Trump: E15 Year-Round, Find Waivers Fix
The White House announced plans to allow E15 sales year-round, while scrapping plans to cap renewable identification numbers prices. (DTN file photo)

OMAHA (DTN) — The White House is ready to allow year-round E15 fuel sales and plans to reallocate ethanol gallons lost as a result of small refinery waivers granted by EPA in recent years, Sen. Charles Grassley, R-Iowa, announced following a closed-door White House meeting on Tuesday. E15 fuel is a blend of 15% ethanol and 85% of gasoline.

It appears any proposal to cap the price for Renewable Identification Numbers (RINs) is no longer on the table, Grassley said. In addition, the EPA and USDA are expected to consider a proposal to attach RINs to ethanol exported out of the United States, a source with knowledge of the meeting told DTN on background.

EPA has taken heat for an increase in the number of waivers granted to small refiners in recent years. Ethanol producers have said the waivers have led to lost ethanol demand. At least 40 waivers issued by EPA in the past two years have led to a recent decline in RIN prices.

EPA reportedly will examine how to reallocate RFS gallons lost by a recent spate of waivers granted in the past few years.

When waivers are granted, EPA is obligated to reallocate the gallons to other obligated parties to the RFS. This is required to be completed prior to setting renewable volume obligations for a given year. That was not done in 2016 and 2017.

Sen. Ted Cruz, R-Texas, took to Twitter to laud the meeting as a win for oil, ethanol and corn interests.

Cruz was part of the White House meeting between Sens. Charles Grassley, R-Iowa, Joni Ernst, R-Iowa, Pat Toomey, R-Pa., President Donald Trump, U.S. Secretary of Agriculture Sonny Perdue and EPA Administrator Scott Pruitt.

“Terrific final decision from @POTUS meeting: E15, year-round plus RINs for all exports. This is a WIN-WIN for everyone. More corn will be sold (good for farmers), plus lower RINs (saves blue-collar refinery jobs), plus more ethanol exports (good for America),” Cruz tweeted out.

Grassley was more guarded in a tweet, saying nothing about attaching RINs to exports: “Had WH mtg on RFS/ethanol. No RIN cap & got E15 yr round. Need to see Perdue+Pruitt plan. Devil in details.”

In a statement to DTN, Grassley said the White House’s actions will help agriculture.

“President Trump agreed to allow for the sale E15 year-round,” he said. “That’s good news for farmers and consumer choice at the pump. Allowing higher blends of ethanol to be sold in the summer months fits in well with EPA’s deregulatory agenda. There was also an agreement to not pursue an artificial cap on RIN prices, which would have destroyed demand for biofuels and hurt biofuels workers.

“I told the president and Administrator Pruitt that EPA’s ‘hardship’ waivers for billionaires are hurting biofuels and undermining the RFS. They also undercut the president’s commitment to meet the annual 15-billion-gallon volume obligation set by Congress under the RFS. There was discussion about how to reallocate the waived obligations so that demand for biofuels wouldn’t be hurt. While details weren’t decided, I look forward to reviewing a plan being developed by Secretary Perdue and Administrator Pruitt. Any fix can’t hurt domestic biofuels production.”

The full implementation of E15 will not happen overnight as it still faces a number of roadblocks to full market expansion.

Brooke Coleman, executive director of the Advanced Biofuels Business Council, said in a statement to DTN, “President Trump scored a big win by putting a final nail in the coffin of the refinery-backed RIN cap scheme. We’re also encouraged that the White House has told EPA Administrator Pruitt to get to work immediately on a long-overdue fix to summer regulations that limit sales of E15.”

Roger Johnson, president of the National Farmers Union, questioned how fast EPA might act on E15 because if some kind of approval is not achieved by then, then year-round E15 would not come until 2019 at the earliest.

“The only way they could do it now is to do an emergency rule, otherwise you have lost E15 for this summer,” Johnson told DTN.

EXPORT RINS

As for examining the possibility of attaching RINs to exports, the idea was proposed by Valero Energy Corp. in 2017 and opposed by ethanol interests. The RINs program is designed to spark domestic blending of ethanol and there are concerns that attaching RINs to exports undermines the RFS.

In an Oct. 19, 2017 letter to Midwest senators, Pruitt said the agency would not pursue the RINs export proposal (https://www.ernst.senate.gov/…).

Growth Energy Chief Executive Officer Emily Skor said in a statement to DTN the idea would harm agriculture and biofuels.

“Attaching a RIN to ethanol exports would have a crippling impact on American agriculture, significantly reducing demand for ethanol and corn,” she said.

“It would also have major trade implications, as export RINs would be considered a subsidy by our global trading partners, who will likely challenge this as unnecessary advantage to U.S. ethanol.”

Renewable Fuels Association President and Chief Executive Officer Bob Dinneen said the RFA continues to oppose the idea of attaching RINS to exports.

“The notion of allowing exported ethanol to count toward an oil company’s RFS obligation is extremely problematic,” Dinneen said in a statement. “Depending on potential implementation, allowing exports to qualify for RFS compliance could dramatically reduce domestic ethanol demand, while most certainly resulting in retaliatory trade barriers from the countries importing U.S. ethanol. Our trade partners in the international market certainly would not understand why the lowest-priced ethanol in the world requires an export subsidy.”

Dinneen said the “real disgrace” would be that “ethanol producers and farmers would bear the brunt of any retaliatory tariffs.”

EPA previously rendered a ruling on such a proposal, “if a gallon of ethanol is produced in the U.S. but consumed outside of the U.S., the RIN associated with that gallon is not valid for RFS compliance purposes since the RFS program is intended to require a specific volume of renewable fuel to be consumed in the U.S.”

Small refiners have decried the costs to comply with the RFS, spending many millions of dollars to buy RIN credits. Most notably, Philadelphia Energy Solutions filed Chapter 11 bankruptcy based by-and-large on what it said was exorbitant RIN costs. The waivers issued by EPA has driven down the price of RINs.

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