Impacts of US NAFTA Withdrawal

Source: By DTN's Washington Insider • Posted: Wednesday, December 6, 2017

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

EPA’s Pruitt Hints at Possibly Expanding Conventional Ethanol Mandate

Increased U.S. ethanol production could translate into a higher mark for conventional ethanol under the Renewable Fuel Standard (RFS) than the current 15 billion gallon level, according to Environmental Protection Agency (EPA) Administrator Scott Pruitt.

While some have criticized EPA for not increase its biofuel targets for biomass-based biodiesel and conventional ethanol, Pruitt said in a December 1 interview with KCCI TV in Des Moines that the agency sets the mandate targets “as objectively as possible.” When the export of ethanol is put into the mix, Pruitt said he was “encouraged” that the industry could “break the cap.” Should that happen, Pruitt said, “We can reset that number and go above the cap.”

Mexico presents an opportunity, Pruitt observed as they are poised to implement an RFS-type program “where they will mandate a certain percentage of their fuel that will have ethanol. We have tremendous opportunities with conventional ethanol.”

On biomass-based biodiesel, Pruitt said what those backing the biofuel have to remember is that “capacity is different than production. You might have the capacity to produce 2.6 billion gallons… but then you have to produce it.” EPA set the biomass-based biodiesel mandate at 2.1 billion gallons for 2018, unchanged from 2017, he noted. “We imported 700 million gallons from Argentina to meet that 2.1 billion number. We should not be importing biodiesel to meet our obligation that we have set. That is a conversation I have had with senators and folks across the country.”

Pruitt pointed to denial of petitions to shift the point of obligation on the RFS as a signal that the administration backs biofuels. “Many in the oil and gas sector wanted us to move that,” he observed. “We denied that petition about a month ago. I think what the president has said to the people of Iowa is that he wants to support and is supporting ethanol. We want to export and will continue strengthening that.”