DES MOINES — The Trump administration says it plans to implement new rules that will increase demand for ethanol, reversing a decline caused by exemptions given to oil refineries.
The proposal announced Friday follows months of complaints by Midwest farmers, politicians and the ethanol industry that the federal government’s granting of waivers to refiners had violated federal law and forced some ethanol plants to close.
The announcement was welcomed by midwest politicians.
“This is welcome news for Iowa’s farmers and the renewable fuels industry,” said Secretary Naig. “President Trump listened to our producers’ concerns and took action to address them. This is what happens when farmers, biofuels producers and government leaders work together to make our voices heard. We are grateful to President Trump for directing EPA to uphold the intent of the Renewable Fuel Standard, and we look forward to working with EPA and USDA to implement today’s announcement. As the number one producer of ethanol and biodiesel in the country, Iowa is proud to lead the nation in reducing our dependence on foreign oil. We will continue to work to restore and build demand for these critical markets for Iowa agriculture.”
Roughly 40 percent of U.S. corn is used to produce ethanol, so declining demand for the fuel additive can depress prices for the grain.
Earlier this summer, Trump angered producers in farm states after directing Environmental Protection Agency (EPA) Administrator Andrew Wheeler to approve waivers for 31 small refineries that claimed blending ethanol with gasoline would have caused them “disproportionate economic hardship.” This is the third year the EPA has granted similar waivers, a move that biofuel officials say has reduced demand by 2.6 billion gallons while last month’s action reduced demand by an additional 1 billion gallons. The decision has drawn criticism from Republicans and Democrats as well as producers and agricultural officials who see the action as a broken promise.
Friday Iowa Senator Chuck Grassley said Trump’s decision were “promises made and promises kept by President Trump.”
“This plan will fix EPA’s exemption process and help farmers and biofuels producers going forward. The solution outlined by President Trump, Administrator Wheeler and Secretary Perdue is exactly how the RFS is meant to function according to the law as written by Congress. The RFS has a built-in mechanism to make up for waived volumes in advance and EPA will be implementing the law as intended,” Grassley said “Maintaining the integrity of the RFS, repealing WOTUS and allowing year-round sales of E15 will all help American agriculture and the rural economy. These are promises made and promises kept by President Trump. President Trump has made clear that he is an ally of corn and soybean farmers as well as ethanol and biodiesel producers. He is fighting for the farmer. This announcement is great news for Iowa, the Midwest and the entire country.”
Biofuel advocates have been pushing the administration to cut back on the hardship exemptions and restore the biofuel mandate of 15 billion gallons.
“That’s exactly what this proposal does,” USDA Secretary Sonny Perdue told AgriTak Radio host Chip Flory. “It ensures a certainty of 15 billion gallons being 15 billion gallons, and EPA has agreed at the present direction to reflect any potential small refinery waivers that are be issued there, to account for those in the overall total to ensure that the minimum of 15 billion gallons is obtained.”
The final agreement does not include full reallocation of previous years’ exemptions but will base future blending requirement reallocations on a rolling three-year average of the exemptions.
Iowa produces roughly 4.3 billion gallons of ethanol and 365 million gallons of biodiesel annually which accounts for roughly 3 percent of Iowa GDP and $2.5 billion of income for Iowa households.