Iowa biofuels advocates caution Trump as ethanol use declines

Source: By Joseph Morton, Omaha World-Herald Bureau • Posted: Thursday, April 18, 2019

WASHINGTON — Iowa biofuels advocates delivered something of a warning shot Wednesday for President Donald Trump.

Iowa Renewable Fuels Association Executive Director Monte Shaw said moves by former Environmental Protection Agency head Scott Pruitt contributed to less ethanol being blended in 2018 than the year before.

Shaw said that broke a streak of increasing ethanol usage that stretched back more than two decades — a streak even a brutal drought wasn’t able to break.

“That’s not the reality many Iowans were expecting based on the promises that President Trump made,” Shaw said.

Shaw held a press conference along with Iowa Agriculture Secretary Mike Naig warning about the potential ramifications if Pruitt’s replacement, Andrew Wheeler, continues his predecessor’s approach to the Renewable Fuel Standard.

The RFS is a federal mandate requiring refiners to blend certain levels of ethanol into the fuel supply or buy credits from other refiners that do so.

It’s intended to pump up demand for the corn-based fuel and support crop prices for Midwestern grain producers.

There are provisions for the EPA to grant exemptions to small refiners facing economic hardship because of the requirements, particularly when the price of those credits skyrockets. But the ethanol industry feels Pruitt went too far in approving such exemptions.

Naig said the waivers from the past two years equaled 2.6 billion gallons of ethanol — an amount that translates into about a billion bushels of corn.

“This happens at a time when our farmers and rural America can least afford it,” he said.

The EPA is currently faced with 39 pending exemption requests and is expected to rule on them soon. Midwestern farms, meanwhile, already are reeling from the impact of trade disruptions and devastating flooding.

“With 39 small refinery exemptions hanging out there, that’s enough gallons to rip the heart out of the RFS,” Shaw said.

On the other side, oil industry representatives have suggested that the complaints about exemptions are overblown.

Still, in a recent interview with Reuters, Wheeler acknowledged that the price of the RFS-related credits has fallen and that means less hardship for refiners. That could translate into fewer exemptions granted, Wheeler said.

Shaw repeatedly cited the dirt-cheap level of those credits and questioned how they could possibly represent a hardship for refiners at this time.

He suggested that Pruitt’s approval of so many exemptions might have been the work of a rogue agency head. But the issue has received so much attention now that whatever Wheeler does will represent a clear administration policy and could have political implications for Trump.

Shaw said corn prices, farm income and ethanol usage have all fallen. “That’s not exactly a record I’d be excited to come into Iowa and run on,” Shaw said.

But both men stressed that the administration now has an opportunity to do right by ethanol producers.

“There is still time to turn around the Trump administration’s record for rural America,” Shaw said.