Trump set to discuss biofuels Thursday with USDA, EPA: sources
WASHINGTON/NEW YORK (Reuters) - President Donald Trump, faced with mounting anger in the farm belt over policies that allow oil refineries to use less corn-based ethanol, summoned cabinet members on Thursday to discuss ways to boost biofuel demand, four sources familiar with the matter said.
Trump was scheduled to meet with Agriculture Secretary Sonny Perdue and Environmental Protection Agency (EPA) Administrator Andrew Wheeler at the White House, the sources said. They said the officials will present options to boost ethanol demand, which farmers say has slumped since the EPA exempted dozens of refineries from ethanol requirements.
One proposal to be presented, which is advocated by the USDA, is reversing some waivers the administration has granted to refineries, sources said. “There are a number of potential solutions in the memo. One is to reverse some of the waivers,” said one source familiar with the plans.
A second source said another option was to redistribute the waived volumes prospectively beginning in next year’s annual biofuel mandate. There were other infrastructure related options to boost the use of E15, a higher ethanol blend of gasoline.
U.S. regulations require refiners to blend biofuels into their gasoline or buy credits to fund those refiners who can. Small refiners can seek exemptions, but Trump’s EPA has granted waivers to refineries owned by the likes of Exxon Mobil Corp (XOM.N), Chevron Corp (CVX.N) and billionaire Carl Icahn.
American farmers, a constituency Trump is counting on in his campaign for re-election in 2020, have seen crop prices slump and exports shrink due to his trade war with China. On Wednesday, biofuel industry groups and farm-state lawmakers complained to the White House about refinery waivers.
Trump campaigned in 2016 as a champion for ethanol but also courted the oil industry. Now he faces a backlash from agricultural and biofuel trade groups and in Iowa, the largest producer of corn and ethanol, a swing state won twice by Democrat Barack Obama but which voted for Trump in 2016.
Democratic presidential hopefuls have spent a lot of time in Iowa because it holds an early nominating contest, and they have used the refinery issue as a cudgel. Senator Amy Klobuchar of Minnesota said that if elected, she would block pending refinery waiver applications and look to reverse any ones approved. She said, at a maximum, only a few should be approved.
“ENOUGH IS ENOUGH”
Farmers and biofuel producers have complained that Trump is favoring the oil industry at their expense. Over the past month, several biofuel plants announced shutdowns or production cutbacks, including the largest U.S. ethanol producer POET.
On Thursday, American GreenFuels, owned by Kolmar Americas, said it was slashing output by 50 percent in fourth quarter, citing pain from waivers and a biodiesel tax credit that expired and has not been renewed. “Enough is enough,” said Raf Aviner, President of Kolmar Americas in a statement. “We cannot justify buying more feedstock under these market conditions.”
Refiners and some academics dispute the contention that waivers have decimated ethanol demand, and the industry and its allies have fought to keep the waivers intact. On Thursday, North America’s Building Trades Unions (NABTU) sent a letter to Trump supporting waivers, saying they significantly reduced costs for refineries and alleviated a threat to thousands of jobs.
Renewable fuel credits for 2019 rose on Thursday morning, trading at 16.5 cents each, up from 14.75 cents each the previous session, traders said. The credits have steadily climbed from trading at 11 cents apiece two weeks ago as refiners sought to actively buy in the market.
Reporting by Humeyra Pamuk in Washington and Stephanie Kelly in New York; additional reporting by Jarrett Renshaw in XXXX; Editing by Chizu Nomiyama and David Gregorio