Wednesday, April 11, 2018

Trump backs off biofuel reforms after failing to broker a deal

"The Trump administration will delay any moves to reform the nation's biofuel policy," reports Jarrett Renshaw of Reuters, adding that one of his three sources source said the move was meant to ease concerns of farmers worried about a potential trade war: "There's just a lot going on right now, so they decided to take a pause and revisit in three months."

President Trump "failed to broker a deal between Big Oil and Big Corn during meetings over months about the future of the U.S. Renewable Fuel Standard, a law broadly supported in the U.S. heartland that requires oil refiners to add biofuels like ethanol to the nation's gasoline," Renshaw notes. "The biofuel reforms threaten to weaken demand for corn-based ethanol, compounding concerns from farmers about a loss of grain exports to China due to the trade dispute. Rural voters are an important constituency for . . . Trump, helping propel his election victory in 2016, but his support with this group has slipped."

The prospect of a deal fell apart Monday, after Trump hosted "the latest meeting on potential RFS reforms," Renshaw reports. "Environmental Protection Agency Administrator Scott Pruitt and Agriculture Secretary Sonny Perdue presented the president with a list of potential options aimed at helping refiners without undercutting ethanol demand. Those options included capping the price of blending credits, called RINs, that refiners must earn or purchase under the RFS while expanding the sales of high-ethanol gasoline blends that are currently banned during summer. The price cap was a non-starter for most of the biofuel industry, a group that includes corn farmers from deep-red states like Iowa and Nebraska, who said it would erode investment in biofuels infrastructure."

A cap would have helped "merchant refiners like Valero and PBF Energy," which don't have blending facilities and must purchase RINs," Renshaw notes. "Trump was drawn into the divisive debate over the RFS by the potential shutdown of oil refiner Philadelphia Energy Solutions. PES, which employs a thousand people in politically important Pennsylvania, has blamed its financial woes on the cost of compliance credits under the RFS."

No comments: