Energy Economy

02 Nov 2019

Big Oil, Big Corn both Blast Trump Biofuel Plan

02 Nov 2019  by Kallanish Energy   
Corn farmers, ethanol producers, refinery representatives, energy traders and state and local officials from the Midwest all blasted the Trump administration’s proposed biofuels plan for next year during a public hearing Wednesday, hosted by the U.S. Environmental Protection Agency.

The hearing in Ann Arbor, Michigan, aired the grievances of the opposing oil and corn constituencies President Trump has been working to retain ahead of next year’s election, Kallanish Energy reports.

At issue is a proposal unveiled this month by Trump’s EPA that would increase the amount of corn-based ethanol some oil refineries must blend next year to make up for volumes the agency expects to waive under its Small Refinery Exemption program, Reuters reported.

The proposal was meant to please farmers, while securing a program the oil industry says is crucial to the survival of small oil refining facilities. It has instead drawn criticism from both sides, Reuters reported.

The corn industry says it does not go far enough to help ailing biofuel producers, already suffering from the impacts of the U.S. trade war with China.

“It is not hard to understand why there is a growing sense of frustration in the heartland,” said Iowa Agriculture Secretary Mike Naig.

The oil industry complains the proposal is unfair to refineries that must do more blending. Patrick Kelly, a spokesman for the American Petroleum Institute, said during the hearing that lasted more than four hours the proposal “punishes the companies already complying” with the nation’s biofuel law, Reuters reported.

The EPA is seeking to finalize the proposal ahead of a Nov. 30, deadline to set 2020 blending requirements.

The U.S. Renewable Fuel Standard (RFS) requires the refining industry to add some 15 billion gallons of ethanol annually to its gasoline, along with additional volumes of other types of biofuels.

But small individual refineries of 75,000 barrels per day or less can secure exemptions from the RFS in a confidential process, provided they prove compliance would cause them disproportionate economic harm.

The EPA has roughly quadrupled the number of waivers granted to small refiners since Trump took office in January 2017, angering the corn industry, which says the exemptions hurt farmers by cutting ethanol blending volumes.

“The rules have changed and now rural America is losing,” said Brian Duncan, farmer and vice president of the Illinois Farm Bureau, Reuters reported. “We were the victims of a classic bait and switch.”

The oil industry says the waivers are crucial to the survival of small refineries and deny the exemptions have a meaningful impact on ethanol demand.

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