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Kwik Trip #305
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Kwik Trip #376
Red Wing,Minnesota
United States 55066
EPA Abandons Changes to U.S. Biofuel Program After Lawmaker Pressure
October 20, 2017
The U.S. Environmental Protection Agency has backed off a series of proposed changes to the nation’s biofuels policy after a massive backlash from corn-state lawmakers worried the moves would undercut ethanol demand, according to a letter from the agency to lawmakers seen by Reuters.
The letter could end uncertainty about the future of the U.S. Renewable Fuel Standard under the administration of President Donald Trump that has roiled commodity and energy markets for months. The program, which requires refineries to blend increasing amounts of ethanol and other biofuels into the nation’s fuel supply every year, appeared on the verge of a massive overhaul.
EPA Administrator Scott Pruitt said in the letter dated Oct. 19 that the agency will keep renewable fuel volume mandates for next year at or above proposed levels, reversing a previous move to open the door to cuts. He said the EPA would not pursue another idea floated by EPA leadership that would have allowed exported ethanol to be counted toward those volume quotas.
Pruitt also said the EPA did not believe a proposal to shift the biofuels blending obligation away from refiners was appropriate. That plan is backed by representatives of a handful of independent refining companies.
Those ideas would have eased the burden on some in the refining industry, who have argued that biofuels compete with petroleum, and that the blending responsibility costs them hundreds of millions of dollars a year.
But Midwestern lawmakers, including Republicans Charles Grassley and Joni Ernst, had vocally opposed all those ideas, calling them a betrayal of the administration’s promises to support the corn belt. They were concerned the moves would undercut domestic demand for ethanol, a key industry in the region that has supported corn growers.
In Pruitt’s letter, he said the EPA was prepared to work with Congress to examine the possibility of a waiver that would allow the sale of E15 gasoline, containing 15 percent ethanol, year-round - something currently not permitted during the summer due to concerns about smog.
Renewable Fuels Association President and CEO Bob Dinneen said in a response to the letter on Friday morning that the U.S. ethanol industry was “grateful for Administrator Pruitt’s epiphany on the road to the RFS.”
Read the letter from Pruitt here.
Read the original article: EPA Abandons Changes to U.S. Biofuel Program After Lawmaker Pressure
Trump Tells EPA to Boost Biofuels After Iowa Uproar
October 18, 2017
By Jennifer Jacobs, Jennifer A Dlouhy, and Ari Natter
President Donald Trump intervened personally with the Environmental Protection Agency amid pressure from Republicans in the politically important state of Iowa who worried the agency was poised to weaken biofuel quotas, three people familiar with the discussions said.
Trump directed EPA Administrator Scott Pruitt to back off any changes that would dilute a federal mandate for biofuel use, the people said. A top EPA official said Trump’s urging was unnecessary because Pruitt wasn’t planning on weakening the mandate.
Nevertheless, the agency was told by the White House to drop two changes that were under consideration: a possible reduction in biodiesel requirements and a proposal to allow exported renewable fuel to count toward domestic quotas, said the people, who asked not to be identified because they were not authorized to speak publicly about the move.
The issue is politically treacherous for the president because it pits his allies in the oil industry against Midwest voters who helped elect him, including Iowans who hold first-in-the-nation presidential caucuses. While campaigning in Iowa last year, Trump pledged to protect ethanol and the biofuel mandate.
Trump called Iowa Governor Kim Reynolds Wednesday to reassure her of his commitment to the program. "It was a really good, productive conversation," she said in an interview.
Pruitt has also been working behind the scenes to soothe Midwestern politicians and biofuel backers alarmed by the possible changes the EPA was considering, the top agency official said.
Reynolds is one of a phalanx of Midwest politicians who have lobbied the administration by highlighting the president’s promises to support ethanol and signaling that any move to weaken annual quotas would be seen as a betrayal.
"They are feeling the pressure, and that’s why we need to keep it up, we can’t let down," Reynolds said during a press conference with biofuel backers in Pella, Iowa.
The 12-year-old Renewable Fuel Standard compels refiners and importers to use biodiesel and alternative fuels such as corn-based ethanol. It is especially valued in the Midwest, where corn and soybean farmers see the program as vital to ensure predictable demand. But the RFS also is opposed by many oil refiners that argue it’s a costly and burdensome mandate that forces them to blend ethanol into gasoline -- or buy credits to make up the difference.
It was not immediately clear whether the administration’s assurances -- which weren’t announced publicly -- will be enough to satisfy lawmakers who have threatened to stall EPA nominees over the issue. The EPA official said the latest information they have is that the senators are not holding up any particular nominee.
But Iowa Republican Senator Joni Ernst refused to commit to backing one EPA nominee in a news release Wednesday, only saying she was close to getting the assurances she needed.
The EPA has a Nov. 30 deadline to finalize next year’s quotas, and it may not announce any changes before then.
"The proof is in the pudding," said Monte Shaw, head of the Iowa Renewable Fuels Association. "We need to see the details."
The EPA ignited a backlash last month when it asked for public comment on potential biofuel quota reductions and floated the idea of a 15 percent reduction in requirements for biodiesel. Pruitt has said that notice was only seeking comment, not committing to any reduction in biofuel quotas.
Separately, EPA staff had been considering a proposal from some refiners to allow some exported biofuel to count toward the domestic mandate -- a move that would make it easier and cheaper to meet annual domestic quotas. Pruitt is also concerned about imported biodiesel being used to fulfill the quotas and jeopardizing U.S. energy independence.
The market for credits refiners use to show compliance with the mandates indicates that traders think ethanol backers will prevail.
Renewable Identification Numbers tracking ethanol consumption for 2017 fell in late September after the reports of possible EPA changes. Since hitting a low of 66 cents per credit on Sept. 28, those RINs bounced back to 83 cents apiece after news emerged that Trump had intervened.
Pruitt has assured people he is following through on Trump’s pro-ethanol promises. In July, the agency proposed requiring U.S. refiners use 15 billion gallons of conventional renewable fuels in 2018 -- the maximum allowed under the Renewable Fuel Standard. Oil refiners had pushed for a lower target.
And agency officials have been studying whether they have authority to allow gasoline containing 15 percent ethanol to be sold year-round, something the biofuel industry is seeking.
But news of possible changes to other parts of the program provoked a strong response from Midwestern Republicans, led by Iowa Senator Chuck Grassley who immediately began pressuring the Trump administration to back off those ideas.
Grassley took to Twitter to blast a "bait and switch" by the administration, saying any moves to weaken the Renewable Fuel Standard program conflicted with Trump’s vow to support ethanol and Pruitt’s assurances to uphold congressional intent behind the mandates during his confirmation hearing.
"You can get in the weeds about what you want to do or not do in the way of policy, but this is an issue of the president keeping his promise," Grassley said Tuesday.
Trump urged Pruitt to work with Grassley to resolve the issues.
Farm-state senators met with Pruitt over the issue on Tuesday, after Ernst told reporters she couldn’t commit to backing a nominee to head the EPA air office that administers the renewable fuel program. A planned Senate committee vote on that nomination, scheduled for Wednesday, was scrapped afterward. Ernst is a member of that committee, on which Republicans hold a narrow 11-10 margin.
"A handful of senators completely cornmailed the administration by threatening to hold nominees hostage until they get their way," Stephen Brown, the head of federal affairs for refiner Andeaver, said in an email. "Faced with tactics that would have made Don Corleone blush, the administration essentially had no choice but to relent."
On Wednesday, Ernst said she was close to getting the reassurances she needs.
“My staff and I will continue to keep a watchful eye as these assurances come to life, and while we are still in negotiations, I do feel good about the direction we are headed," Ernst said in an emailed statement.
Outside analysts predicted that Iowa’s political clout will help it prevail in the end.
"The track record here has been pretty strong with these Midwest senators," said Paul Niznik, a consultant to refiners and others who track the RIN market for Argus Consulting Services. "We know it’s not going to happen. It looks like political theater."
Read the orignal article: Trump Tells EPA to Boost Biofuels After Iowa Uproar
New Statistical Analysis: No Relationship Between RIN Credits and Retail Gasoline Prices
October 16, 2017
By Emily Druckman
Despite continued claims by opponents of the Renewable Fuel Standard (RFS), prices of the Renewable Identification Number (RINs) credits used for RFS compliance have not caused changes in retail gasoline prices, according to a new analysis by Informa Agribusiness Consulting.
The analysis, commissioned by the Renewable Fuels Association (RFA), looked at trends in the prices for conventional biofuel RINs and retail gasoline from 2013 to the summer of 2017.
“Based on statistical analysis, it can be concluded that changes in RIN prices did not ‘cause’ the changes that occurred in retail gasoline prices in 2013, and this has continued to be the case through the summer of 2017,” according to Informa Agribusiness Consulting. Instead, the price of retail gasoline has been primarily driven by movements in crude oil prices and by changes in the spread between domestic and international crude oil prices, as well as seasonal demand, the analysis found.
“…[C]hanges in RIN prices have not caused changes in retail gasoline prices (or vice-versa). To any extent that the two are related, it is not a direct causal relationship,” the analysis noted.
“EPA seems to be on a mission to lower the price of RINs,” said RFA President and CEO Bob Dinneen. “The Agency’s proposed 2018 RFS renewable volume obligations, which for the first time lowered the total RFS volumes from the previous year, a subsequent Notice of Data Availability proposing to lower the RFS further to reflect anticipated reductions in imported biodiesel, and rumors of an impending proposal to allow exported biofuel to qualify for the domestic program, all would have the effect of lowering the price of RINs. But this analysis demonstrates that EPA’s efforts will have no impact on consumer gasoline prices. If finalized, however, these proposals will have a decidedly negative impact on the U.S. ethanol industry by artificially cannibalizing demand. If the intent is to lower the price of RINs, EPA should consider expanding ethanol demand by empowering consumers to utilize higher level ethanol blends. After all, ethanol is less expensive than gasoline today and RINs attached to each gallon of ethanol purchased from a producer are free,” he said.
“Thanks to the RFS, U.S. ethanol jobs have grown 121% and the value of ethanol’s output quadrupled to $32.8 billion in 2016. Big Oil needs to stop scapegoating the RFS and ethanol. The RFS is helping to bring the cleanest, lowest-cost and highest-octane fuel to consumers, and no amount of obfuscation can dispute that fact,” Dinneen added.
The Informa Agribusiness Consulting analysis is available here.
Read the original story: New Statistical Analysis: No Relationship Between RIN Credits and Retail Gasoline Prices
Ernst Meets with EPA Administrator Pruitt to Stress Need to Maintain a Strong RFS
Press Release
October 17, 2017
WASHINGTON, D.C. – U.S. Senator Joni Ernst (R-IA), a member of the Senate Committee on Agriculture, Nutrition, and Forestry and the Senate Committee on Environment and Public Works, issued the following statement after meeting with Environmental Protection Agency (EPA) Administrator Scott Pruitt to express her significant concerns over the agency’s recent action to potentially set biodiesel volumes in the Renewable Fuel Standard (RFS) for 2018 and 2019 at substantially lower volumes, which could in turn, hurt Iowa farmers, manufacturers, and rural communities. “Iowa is the largest producer of ethanol and biodiesel in the nation. Our farmers, ranchers and rural communities depend on maintaining a strong RFS. Time and again, the RFS has proven to be a major driver of alternative fuels and economic development. “Throughout his confirmation process, Administrator Pruitt promised me multiple times that he would uphold the spirit of the RFS, as intended by Congress. Additionally, the President has consistently stated his support for biofuels and made it clear to Administrator Pruitt that he is supportive of the RFS. While the administrator has insisted that the recent actions taken by the EPA are simply to receive additional input on the RFS from stakeholders, it is evident that the ‘stakeholders’ he refers to are not the farmers and manufacturers across the State of Iowa who would be directly affected if the biodiesel volume requirements were lowered. “Our meeting today was another clear demonstration that biofuel-producing states will never stop fighting to protect the RFS. Administrator Pruitt again claimed today that he will not do anything to undermine the program. However, we have heard this before. We now need to see it. I will continue to work with the EPA, but they must prove to the agricultural community who put their faith in this administration that they will fulfill their promise to maintain the letter and the spirit of the RFS. We will not accept anything less.” |
Senator Ernst has been a vocal opponent of any actions taken to lower RFS volumes, stressing her position through letters to EPA Administrator Pruitt and to President Trump. The Senator received commitments from Administrator Pruitt in their pre-confirmation meeting and during his confirmation hearing that he would follow the law and maintain the RFS.
Read the original press release: Ernst Meets with EPA Administrator Pruitt to Stress Need to Maintain a Strong RFS
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