Trump, Facing Farmers’ Discontent, Plans Help for Ethanol

Source: By Lisa Friedman, New York Times • Posted: Sunday, October 6, 2019

President Trump toured the Southwest Iowa Renewable Energy plant in Council Bluffs, Iowa, in June.

CreditCreditGabriella Demczuk for The New York Times

WASHINGTON — The Environmental Protection Agency and the Department of Agriculture jointly proposed new rules on Friday that would increase ethanol consumption at the expense of oil refineries to help corn and soybean farmers buffeted by President Trump’s trade wars.

The plan would overhaul the system of quotas for ethanol, a fuel that is made from corn and other crops, as they blend their fuels. Its overall goal is to increase the sale of the biofuel beyond the current mandate of 15 billion gallons annually.

It also will ensure that a gasoline blend made of 15 percent ethanol will be available at the pumps already in place at most gas stations, rather than requiring the installation of new pumps. The proposal also includes trade measures to increase the access of ethanol to foreign markets.

The move is widely viewed as an effort to relieve pressure on farmers at a time when the Trump administration is escalating its trade war with China and Europe.

Kevin Book, managing director at Clearview Energy Partners, a research firm, said he did not expect Mr. Trump to ease up on import tariffs that have prompted retaliation against American agricultural exports. But, he said, farmers are critical to the president’s re-election effort, and their anger is forcing Mr. Trump to favor grain farmers over the oil and gas industry, which has resisted fuel blends that are higher in ethanol as expensive and inefficient.

“Trade has made the president more farmer-friendly,” Mr. Book said. “The trade pressures on his Midwest base have forced concessions that otherwise might not have happened, given the president’s pro-fossil ideology.”

Midwestern lawmakers greeted the proposal warmly. Senator Chuck Grassley, Republican of Iowa and a critic of the trade war, said in a statement that Mr. Trump had “listened to the concerns of farmers and biofuel providers and delivered on their behalf.”

But oil-state lawmakers and oil-industry leaders were critical. Senator John Barrasso of Wyoming, chairman of the Committee on Environment and Public Works, which oversees the E.P.A., issued a statement saying he believed it would lead to shuttered refineries and lost jobs. He noted that refineries employed thousands of people in Wyoming alone.

“Any plan to transfer small refineries’ biofuel obligations to other refineries will do more harm than good,” Senator Barrasso said.

Amid the trade wars, skepticism in the farm states remains high, in part because the administration has been behind many of the waivers granted to refiners seeking exemptions from ethanol mandates.

“Between the unsustainable trade war and extraordinarily tough weather conditions, the agriculture community in Illinois has been struggling to stay afloat amid unprecedented uncertainty,” said Representative Lauren Underwood, a freshman Democrat in a district that stretches from the suburbs of Chicago into farm country.

“I’m pleased that today’s announced plan will help address the hollowing out of the Renewable Fuel Standard,” she said, referring to the federal rule on ethanol requirements.

Ethanol has long been mixed into some types of gasoline under the federal fuel-standard mandate, partially as a way to reduce reliance on oil, partially as a favor to powerful farm-state lawmakers. That mandate outlines how many gallons of ethanol and biodiesel refiners must blend into the nation’s fuel supply each year.

Over the past two years, the Trump administration has routinely granted small refiners exemptions from the mandate.

The E.P.A. said it would begin to take comments on expanding federal biofuel requirements in the coming months and would take a final action this year to increase ethanol consumption in 2020, an election year.

“Today’s agreement is the latest in a series of steps we have taken to expand domestic energy production and improve the R.F.S. program that will result in sustained biofuel production to help American farmers,” Andrew Wheeler, the administrator of the E.P.A., said in a statement.

Scott Segal, a lawyer with the firm Bracewell who lobbies on energy issues, said he was skeptical that the proposal would satisfy the ethanol industry.

“With the ethanol industry, too much is never enough,” Mr. Segal said. The administration really has no assurance that agribusiness won’t demand more and more, just as they always have.”

Mike Sommers, president of the American Petroleum Institute, which represents the oil industry, said the companies he represents were “deeply concerned” about the plan and warned that it could result in higher costs for consumers at the gas pump