Senator expects Trump to announce limit on credits

Source: By Marc Heller, E&E News reporter • Posted: Wednesday, September 25, 2019

A senator who participated in last week’s meeting with President Trump on ethanol policy said he expects the administration to soon announce price controls on renewable fuel credits — though he admitted he’s been proved wrong on Trump’s plans before.

“I came away from that meeting believing that the answer to that question is yes,” Sen. John Kennedy (R-La.) told E&E News yesterday, adding that others may have had varying interpretations.

“We’ve had a number of these meetings, and I’ve walked out thinking one thing and it comes out another,” Kennedy added.

The signals about an impending change to the renewable fuel standard have petroleum interests and the ethanol industry on edge, expecting a mix of ideas that would benefit biofuels in some ways and refiners in others.

Kennedy said senators have been told that National Economic Council Director Larry Kudlow is in charge of crafting the new policy, along with EPA Administrator Andrew Wheeler.

An industry source familiar with some details of last week’s meeting told E&E News that Trump appears to support a limit of 10 cents on the price of renewable fuel credits, called renewable identification numbers.

It’s not clear how that would be accomplished, the source said, with a price cap just one of a few ways to put a roof on prices paid by refiners.

Biofuel groups oppose government controls on RIN prices, which they say would undermine the RFS. Refineries buy the credits as a way to show compliance with the biofuel blending requirements, particularly if they don’t actually blend the fuel themselves.

The groups have also stepped up efforts to promote biofuels. Yesterday, the industry group Growth Energy said in a reportthat increased corn production associated with the RFS hasn’t been proved to have any adverse impacts on land and water.

Critics of the RFS say they worry that the Department of Agriculture, with its interest in supporting corn farmers, is applying undue influence on EPA as the new policy is being formulated. One free-market energy policy group, the Institute for Energy Research, said yesterday it’s asking the USDA for additional documents related to officials’ activity on the RFS.

The organization said it’s especially interested in the activities of Deputy Agriculture Secretary Stephen Censky, a former president of the American Soybean Association, who has spoken out in favor of policies that boost biofuels. Soybeans are a significant feedstock for biodiesel.

“Given that soybeans are the second largest source of biofuels used for compliance with RFS, knowing whether or not Mr. Censky is undertaking actions to materially benefit his former employer is of grave importance. Let’s hope he is not,” said IER President Thomas Pyle in a statement.

On the other side of the issue, biofuel groups say the USDA has played an appropriate role in advising EPA, even though the USDA’s legal role in biofuel policy is limited.

The National Biodiesel Board’s vice president of federal affairs, Kurt Kovarik, told reporters at a roundtable meeting last week, “I think it’s pretty cheeky of an industry to go after someone like Steve Censky when you look at the effort to which they’ve had advocates or former lobbyists or former attorneys for the refining industry in positions of power that have much more influence over the implementation of the program.”