Governors' Biofuels Coalition

The Trump administration appears close to a biofuel agreement that would boost sales of higher-ethanol fuel while offering merchant refiners limited relief from renewable fuel mandates, key senators said today.

Following a meeting at the White House today with President Trump, senators said they believe an emerging deal would expand availability of fuel that’s 15 percent ethanol — satisfying a top priority of the ethanol industry — and make exported ethanol qualify for renewable fuel credits as the petroleum industry has demanded.

“We reached a final deal,” Sen. Ted Cruz (R-Texas) told reporters.

Cruz said Trump pledged to lift seasonal restrictions on the sale of E15, which would boost demand for the higher-ethanol fuel. That could lead to production of an additional 700 million gallons of ethanol and 280 million bushels of corn, Cruz said.

E15 can’t be sold, generally, in the summer because of fuel volatility rules meant to protect against ozone pollution. The ethanol industry says it’s less polluting than E10, the dominant fuel sold nationwide year-round.

“That is a big, big win for corn farmers,” Cruz said.

At the same time, Cruz said, allowing exported ethanol to qualify for renewable fuel credits — also known as renewable identification numbers, or RINs — would lower costs for refiners who buy RINs to show compliance with the renewable fuel standard.

Putting RINs on exports would also increase ethanol exports, which Cruz said would be good for the nation as a whole.

Corn-state lawmakers were more cautious in their comments, saying they wanted to be sure an agreement comes into shape before declaring the discussions done.

“I think we’re very close. I’m very happy,” Sen. Joni Ernst (R-Iowa) told reporters.

Ernst, who participated in the meeting with Cruz and Sens. Chuck Grassley (R-Iowa) and Pat Toomey (R-Pa.), said Agriculture Secretary Sonny Perdue and EPA Administrator Scott Pruitt were to meet this afternoon on the issue.

“They’re going to be visiting about what we can work out,” Ernst said.

Toomey told reporters that the RIN export issue was part of the discussions and that final details still needed to be solidified.

“I think the effects will be mixed, and we’ll see how it all shakes out,” Toomey said.

Today’s meeting was the seventh such gathering at the White House to try to reach a compromise on the RFS. Critics say the policy hurts merchant refiners who don’t blend ethanol and are thus boxed into buying RINs; Philadelphia Energy Solutions Inc., a Pennsylvania refinery, has blamed RIN costs for its bankruptcy filing earlier this year.

On the other side, ethanol advocates say that the RFS was intended to gradually increase biofuel production and that the policy is working as intended. It was first enacted in 2005, then updated in 2007, and sets minimum amounts of biofuel to be put into the nation’s fuel supply.

The measures under consideration could be accomplished through regulation, rather than legislation.

“This is a fix that addresses the problems right now,” Cruz said. But the senator said he doesn’t rule out seeking legislation for longer-term changes to the RFS, a battle that’s been brewing in Congress for several years.

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