Basically, no one really likes Trump’s ethanol plan

Source: By John Siciliano and Josh Siegel, Washington Examiner • Posted: Monday, April 1, 2019

Both the oil refiners and the ethanol industry aren’t the biggest fans of President Trump’s plan to boost the amount of ethanol in gasoline, say industry reps.

The Trump administration has a tendency to try “to be all things to all constituencies,” but in this case the two provisions in the Trump plan are “completely incompatible,” Brian Jennings, president and CEO of the American Coalition for Ethanol, told John.

Jennings flies to Washington next week with dozens of his members and ethanol producers for meetings with the administration and Congress, and the incompatibility of the rules’ provisions will be top on the list to discuss.

Jennings wants the Environmental Protection Agency to move forward with regulatory reforms that would allow the sale of 15-percent ethanol fuel blends year round, which is part of the Trump plan. But he said that the provisions of the plan that benefit the refiners, which makes up the second part of EPA’s proposed action, should be removed.

“We need this E15 rulemaking to be done, we need it to be done on time, and preferably we need it done free of these burdensome RIN reforms that would erase a lot of the gains that the administration is hoping to see from selling E15 year round,” Jennings said in an interview with John Thursday evening.

The RIN reforms refer to the ethanol credits that refiners must purchase to comply with the EPA’s Renewable Fuel Standard program, requiring refiners to blend an increasing amount of ethanol and other biofuels each year into the nation’s fuel supply.

The cost of the RIN credits have cut into refiners’ profits, as the prices from RINs can be subject to wild fluctuations.

The Trump plan tries to inject more predictability into the RIN trading market by increasing trading transparency to catch market manipulators. But the ethanol industry thinks it will only reduce the impetus for refiners to actually blend more E15, and invest in the infrastructure needed to sell more of the fuel.

EPA abuses: Jennings also said he will be “complaining loudly” to the administration next week about EPA’s illegal use of its small refinery exemption program to allow dozens of refiners off the hook when it comes to blending ethanol.

The ethanol coalition will be urging the administration to put the EPA back on track with the law when it comes to the refinery exemptions, which EPA has abused, said Jennings.

A Friday spent in Michigan: The entire renewable fuel industry — both ethanol and other biofuel segments — is poised to raise problems with EPA on Friday at the first public meeting on the ethanol proposal held at the Ann Arbor Marriott in Ypsilanti, Michigan. EPA’s automotive test lab is located in Ann Arbor.

“We will be saying that the RIN Reform proposals are baseless, since there is no evidence presented of RIN market manipulation,” Paul Winters, spokesman for the National Biodiesel Board, told John ahead of the proceedings.

What the refiners want from Trump’s plan: The refiners, similarly to the ethanol industry, also don’t like half of the Trump plan — the ethanol half.

“We are saying E15 is bad policy and likely illegal,” Frank Maisano, with the Bracewell law firm representing independent refiners, tells John.

He argues that removing the current restrictions on E15’s summertime use, as the plan proposes, may not be up to EPA to consider, suggesting that Congress may be the final arbiter in making that decision.

“However, the Coalition is pleased that EPA has recognized the serious need for significant reforms to the volatile and opaque RIN trading market,” he said.

Maisano addressed EPA on behalf of the Fueling American Jobs Coalition, which represents refiners, unions, and other stakeholders.

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers John Siciliano (@JohnDSiciliano) and Josh Siegel