Trump plans “giant package” to please biofuel producers

The Trump administration is planning a “giant package” related to ethanol to please farmers who have been urging the US President to restore lost biofuel demand due to small refinery exemptions (SREs).

Reuters wrote on 29 August that US President Donald Trump did not offer details on what the “giant package” would contain.

Clashes between farmers and the petroleum industry over biofuel policy was posing a challenge for Trump, who was counting on both groups’ support in presidential elections next year, the news agency said.

The US Environmental Protection Agency (EPA) approved the year-round sale of petrol blended with 15% ethanol (E15) on 30 May, which is expected to boost ethanol demand. However, in August, the EPA granted 31 SREs, which the corn lobby has called excessive.

SREs are granted to petroleum refiners that process less than 75,000 barrels/day and demonstrate “disproportionate economic hardship”.

US ethanol association Growth Energy said that over the past three years, the EPA had issued 85 SREs, some to refineries owned by large oil companies such as ExxonMobil and Chevron.

“The EPA’s mismanagement of SREs has created an artificial cap on domestic demand for ethanol,” leading US ethanol producer POET said on 20 August.

The company added that it had reduced production at half of its 28 biorefineries, and corn processing would fall by an additional 100M bushels across Indiana, Iowa, Michigan, Minnesota, Missouri, Ohio and South Dakota.

“So far, the EPA has cut biofuels demand by 4bn gallons (18bn litres) and reduced demand for corn by 1.4bn bushels, causing severe damage in rural America.”

Growth Energy called for urgent action to restore biofuel demand lost to oil industry handouts when commenting on the EPA’s final 2020 Renewable Volume Obligations (RVO), due by 30 November.

The RVOs would determine next year’s biofuel targets under the Renewable Fuel Standard (RFS).

Growth Energy CEO Emily Skor said dozens of biofuel plants had cut production and ethanol consumption fell for the first time in 20 years in the wake of the recent trend of issuing SREs.

American Fuel and Petrochemical Manufacturers president, Chet Thompson, dismissed the ethanol industry’s and farmers’ concerns, citing data from the US Energy Information Administration which showed that ethanol consumption for the first five months of 2019 was at its highest since at least 2010, Reuters reported.

The chief executives of three major US refiners – Valero Energy, Marathon Oil and Flint Hills Resources – also wrote a letter to Trump on 28 August, saying waivers did not reduce ethanol demand and were not the reason for the dwindling biofuels industry.