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Executive Branch Quiet About Potential Biofuels Blending Agreement

Last week, Reuters writers Jarrett Renshaw and Stephanie Kelly reported that, “The U.S. Environmental Protection Agency granted some refineries full waivers from biofuels regulation for the 2018 compliance year, even though the Department of Energy had recommended partial exemptions, according to an EPA memo seen by Reuters.

“The decision upset the powerful U.S. corn lobby, already angry at the Trump administration’s move in August to grant 31 full exemptions to refineries, freeing them from an at-times costly obligation to use biofuels such as corn-based ethanol.”

The Reuters article noted that, “The issue shows how President Donald Trump has struggled to simultaneously please the corn and oil industries, key political constituencies leading into next year’s presidential election that have routinely clashed over future biofuels policy.

The Aug. 9 memo showed the EPA granted ‘full exemptions for those 2018 small refinery petitions where DOE recommended 50% relief.’

Renshaw and Kelly added that, “Under pressure over the most recent round of 31 waivers, Trump last month promised a ‘giant package’ to farmers to boost the market for ethanol. That plan has yet to be released.”

Meanwhile, Donnelle Eller reported on the front page of Thursday’s Des Moines Register that, “An Iowa biodiesel plant announced Tuesday it’s shutting down as Gov. Kim Reynolds warned that federal waivers exempting oil companies from using renewable fuels are hurting the state’s rural economy.

“‘We continue to see farmers that are impacted,’ Reynolds said at a weekly meeting with reporters. ‘We continue to see ethanol plants that are being idled.’

“‘They’re burning through their cash reserves,’ the Republican said.”

“Losses mount: 3 renewable fuel plants shut,” by Donnelle Eller and Barbara Rodriguez. The Des Moines Register (Front Page, September 26, 2019).

The Register article stated that, “Roy Strom, CEO of W2 Fuel, said Tuesday he is closing the company’s 10-million gallon biodiesel plant in Crawfordsville in southeast Iowa, along with a plant in Michigan, given growing losses.”

Ms. Eller explained that, “Northwest Iowa plants Siouxland Energy Cooperative and Plymouth Energy also have said they are closing, given the poor renewable fuels market.

“Reynolds said she felt confident the president would honor a verbal agreement Midwest leaders reached with him and his administration to restore biofuels demand, even though Trump met last week with congressional leaders from oil-rich states.”

Also on Thursday, Reuters writer Stephanie Kelly reported that, “U.S. biofuel industry sources said on Thursday they were concerned that an impeachment inquiry against President Donald Trump could delay a pending deal on biofuels policy that is meant to boost demand for corn-based ethanol and biodiesel.”

The Reuters article pointed out that, “Farmers on a call with media on Thursday implored the Trump administration to reach a deal soon to make up for the exemptions.

‘Many farmers are losing patience with the president, and he has to rein in his EPA right now or there will be political consequences to that because of the economic damage we’re suffering,’ said Ron Heck, an Iowan soybean farmer.

And DTN writer Todd Neeley reported late last week that, “State leaders of corn grower organizations in 23 states called on President Donald Trump on Friday to follow the Renewable Fuel Standard and reallocate biofuels gallons not blended with petroleum since 2016.

“The Trump EPA has approved 85 small-refinery exemptions to the RFS since 2016, and most recently 31 for 2018 on Aug. 9. In total, the administration has exempted 4.04 billion gallons of biofuels.

“The Trump administration reportedly was moving close to a final deal that would have reallocated the lost gallons. Following a meeting at the White House last week with senators from oil-producing states, the administration has been quiet about the timing of or the final details of any agreement reached.”

Bloomberg writers Mario Parker and Jennifer A Dlouhy reported on Monday that, “The impeachment inquiry into President Donald Trump is reverberating in the market for biofuel credits as his fight against Democrats is likely to take precedence over the ‘giant package’ for ethanol and farmers he promised in late August.

“Prices for Renewable Identification Numbers, or RINs, the credits used by refiners to show compliance with U.S. quotas for grain-based ethanol and biodiesel, have lost at least $1.4 billion in value since Sept. 18, when reports surfaced that a whistleblower complaint centered around Trump’s communications with a foreign leader, later revealed as Ukraine President Volodymyr Zelensky. On Sept. 24, House Speaker Nancy Pelosi, a California Democrat, announced the start of an impeachment inquiry.”

“Trump Impeachment Fight Is Hurting the Market for Biofuel Credits,” by Mario Parker and Jennifer A Dlouhy. Bloomberg News (September 30, 2019).

“Prices for RINs tracking 2019 ethanol targets have fallen 31% to 17 cents apiece since Sept. 18. Biodiesel RINs and advanced biofuel RINs have declined 7.7% during that same period, according to broker data compiled by Bloomberg. The figures don’t account for RINs tracking cellulosic ethanol,” the Bloomberg article said.

Keith Good Photo

Keith Good is the Farm Policy News editor for the farmdoc project. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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