Perdue urges Trump to oppose renewable-credit price caps

Source: Marc Heller, E&E News reporter • Posted: Wednesday, March 21, 2018

Agriculture Secretary Sonny Perdue said yesterday he’s pressing President Trump not to endorse a cap on the price of renewable fuel credits, a flashpoint in the debate over ethanol mandates.

Perdue told reporters after a speech at the National Press Club that capping prices on renewable credits — also known as Renewable Identification Numbers, or RINs — is an overly simple solution to the complexities of biofuel markets.

He said he doesn’t know whether the White House will take that approach and that he’s not meeting with U.S. EPA Administrator Scott Pruitt on the issue this week, despite a news report claiming that this morning.

He said they met last week to discuss potential solutions and that the USDA position is against price caps.

“We’ve impressed upon him that simple is good in some things but not good in others,” Perdue said. “I don’t know that the president will make that choice; it has been obviously offered early on as a solution, but sometimes simple solutions don’t work for complex problems.”

Perdue continued, “This is a complex issue that I think needs a reasonable solution that doesn’t include a RIN cap.”

Controlling RIN prices has become a top priority for merchant refiners and lawmakers such as Sen. Ted Cruz (R-Texas) who are pushing to scale back the renewable fuel standard. Philadelphia Energy Solutions, with a refinery in Philadelphia, has blamed the high cost of RINs for its recent bankruptcy filing.

The Trump administration has proposed to ease the RIN requirement on PES temporarily, while the industry and the administration keep discussing broader, long-term changes (Greenwire, March 14).

In remarks at a National Agriculture Day event at the Press Club, Perdue said he recognizes the challenges facing merchant refiners, and that Trump remains committed to biofuel mandates even as he looks for ways to protect refinery jobs.

In the meantime, Perdue said, the publicity about RINs, and the prospect of policy changes, may explain why prices for renewable fuel credits have tumbled this year from around 80 cents each to 38 cents. Cruz has proposed a cap of 10 cents.

“The conversation itself already has been helpful in driving RIN prices down,” Perdue said.

Cruz and the administration have also discussed the idea of waiver credits, a system that would allow refiners to buy credits directly from EPA rather from other companies, which wouldn’t be attached to actual ethanol. Ethanol advocates say the waiver credits would amount to a price cap in practice.

Officials continue to consider expanding availability of higher-ethanol E15 fuel to year-round, which Perdue said he supports as a way to boost ethanol and drive down RIN prices. That position echoes the ethanol industry.

But it’s not clear, Perdue said, whether changes to the RFS will come through administrative actions or from Congress.

“I think the White House is trying to determine whether they need to make a call on a decision or allow Congress to go back and fix it,” Perdue said. “We’ve had some members of Congress call and say, ‘We’ve been working on this, and let us handle it.'”