Trump boosting biofuel in bid to tamp down farm state ire
President Donald Trump, seeking to tamp down political fallout in U.S. farm states essential to his reelection, has ordered federal agencies to shift course on relieving some oil refineries of requirements to use biofuel such as cornbased ethanol.
Trump and Cabinet leaders decided late Thursday they wouldn’t make changes to just-issued waivers that allow small refineries to ignore the mandates but agreed to start boosting biofuel-blending quotas to make up for expected exemptions beginning in 2021.
The outcome was described by people familiar with the matter who asked not to be named before a formal announcement could be made.
The decision was reached after a flurry of White House meetings this week on the issue, which divides two of Trump’s top political constituencies: rural Americans and the oil industry.
With the move, Trump largely is siding with farmers, ethanol producers and political leaders in Iowa that have accused the president of turning his back on the industry.
But the administration’s shift risks blowback in Pennsylvania and other battleground states, where blue-collar refinery workers have held rallies to push for relief from U.S. biofuel quotas they say are too expensive.
The largest coalition of U.S. building trades unions Thursday warned Trump that changing course on exemptions would betray the president’s “campaign promise to protect every manufacturing job.”
Representatives of the White House press office didn’t have an immediate comment.
Administration officials agreed to the broad contours of a renewable fuel plan, including further moves to encourage the use of E15 gasoline containing 15 percent ethanol, beyond the 10 percent variety common across the U.S.
Under the tentative plan, the Environmental Protection Agency also will give a 500 million-gallon boost to the amount of conventional renewable fuel, such as ethanol, that must be used in 2020.
A separate quota for biodiesel, typically made from soybeans, would get a 250 million-gallon increase.
The EPA has drawn intense criticism for its Aug. 9 decision to exempt 31 refineries from 2018 biofuel-blending requirements.
Although federal law authorizes the waivers for small refineries facing economic hardship, the number of exemptions has surged during the Trump administration, and biofuel producers say they’re being handed out too freely.
The backlash has been most severe in Iowa, the nation’s top producer of ethanol and the corn used in its manufacture. It’s also critical for Trump’s reelection; the state twice voted for Barack Obama before voting to send Trump to the White House in 2016.
Trump’s Democratic challengers have seized on the issue, with frontrunner Joe Biden accusing the president of lying to farmers and abandoning a campaign promise to “unleash ethanol.”
However, EPA officials and oil industry leaders say the waivers haven’t harmed domestic ethanol demand and blame a glut of the product for suppressing prices.
Trump’s trade war with China has exacerbated the industry’s challenges. As with U.S.-grown agricultural products, ethanol faces retaliatory tariffs in China.
Against the backdrop of the tariffs, the exemptions delivered another blow to the U.S. Midwest, where guaranteed domestic ethanol demand helps provide a floor of support for corn farmers and buttresses swings in commodity prices. Ethanol refining accounts for about 40 percent of U.S. corn consumption.
American “agriculture has a problem if ethanol doesn’t do well,” Green Plains Inc. chief executive officer Todd Becker said by phone Thursday. The Omaha, Neb.-based company created a political action committee last month, and Becker told analysts in May that Green Plains plans to “engage” 2020 U.S. presidential candidates on ethanol policies.
Becker said he “can’t fault” Trump for getting tough on China, but the combination of the trade war and small refinery exemptions was causing too much pain domestically.
“You don’t fight China and then give out SREs,” Becker said. “Farmers are furious now.”