GREAT EXPECTATIONS
Will President Joe Biden come to refineries’ aid on ethanol?
WASHINGTON — While President Joe Biden’s climate policies might not be winning him many friends in the oil sector right now, his position on ethanol could turn some of that around.
Oil lobbyists are eagerly waiting to see whether Biden will sign off on keeping level or even lowering U.S. biofuel mandates, reports of which have swirled around Washington in recent months.
Whether Biden goes ahead remains to be seen, but he is under considerable pressure from labor unions to do something to halt the loss of refinery jobs, which has only increased since the global pandemic cut into fuel demand.
The trade group American Fuel and Petrochemical Manufacturers last month began an advertising campaign urging Biden to fix the biofuels program, claiming the cost of biofuel credits refineries need to stay in compliance had increased almost tenfold, to $30 billion a year.
“What is happening in the (biofuel credit) market is not normal or sustainable,” said AFPM President Chet Thompson. “Policymakers are not paying attention to the very real impacts on U.S. refineries of all sizes and the thousands of men and women — many of whom are unionized workers — employed at these facilities.”
Senators from Biden’s home state of Delaware have quietly urged action as they seek to keep in business the state’s lone oil refinery, the owner of which, New Jersey-based PBF Energy, closed another refinery in Philadelphia last year.
And this week a group of 17 Republican senators, including Texas’ John Cornyn and Ted Cruz, wrote to EPA Administrator Michael Regan, arguing that because of lost fuel demand due to COVID-19 the biofuel mandate needed to be lowered to “levels that comport with reality.”
“(Refineries) subject to the onerous requirements of the (biofuel mandate) have been facing historically high compliance costs, which threaten the viability of these entities’ continued operations,” the senators wrote.
The conundrum for Biden, as it has been for past administrations, is finding a path that keep oil refinery workers employed while also not hurting demand for biofuels, which since the program’s creation two decades ago has become a lucrative market for Midwestern corn farmers.
After the senators’ letter this week, ethanol lobbyists hit back, with Renewable Fuels Association President Geoff Cooper describing the campaign to lower the biofuel mandate as “circling the wagons to protect the status quo for big oil.”
“The Biden administration knows that reducing the 2021 and 2022 (biofuel mandates) would derail the president’s agenda related to clean energy, climate and domestic manufacturing jobs,” Cooper said.
Keeping the ethanol industry happy has come to be viewed as critical to winning elections in the Midwest in recent years. And with the midterm elections a little over a year away, Biden is hoping to maintain his popularity in corn states like Illinois, Minnesota and Wisconsin, where he defeated former President Donald Trump in the 2020 election.
Trump himself knew the political tradeoffs of ethanol all too well. He tried to bridge the divide between oil refineries and corn farmers by handing each side something it wanted, exemptions from the mandate for small oil refineries and a break from summer pollution rules limiting ethanol use.
But Trump never achieved the grand bargain he promised upon entering the White House in 2017, leaving Biden the latest president to try and keep the two sides at bay.