WASHINGTON/DECATUR, Ill. (Reuters) – President Donald Trump will announce a plan to boost demand for biofuels, which farmers and producers say has suffered from waivers the administration has issued exempting oil refiners from requirements to blend ethanol into the U.S. fuel supply, Secretary of Agriculture Sonny Perdue said on Wednesday.
FILE PHOTO: U.S. President Donald Trump returns after travelling to the AMVETS convention in Kentucky, at the South Lawn of the White House in Washington, U.S. August 21, 2019. REUTERS/Tasos Katopodis
The Trump administration has scrambled Cabinet members for several weeks now to churn out a plan that would quell an uproar among American farmers after the Environmental Protection Agency’s (EPA) decision to grant 31 biofuel waivers to small oil refineries.
“This is news the president wants to deliver … over the mitigation” of small refinery exemptions, Perdue told an agriculture policy forum as part of the Illinois Farm Progress Show. He did not provide a timeline for when the president would make the announcement.
Trump later called in to the farm event in Illinois when Perdue was speaking at a different session and told farmers that instead of doing a “quick deal” with China, he wanted to continue with his tough approach to make a comprehensive deal. He did not make any comments about biofuel policy.
Last week Trump tasked Perdue, EPA chief Andrew Wheeler and a few White House advisers to come up with a solution that will boost biofuel demand. Among the proposals circulated was to ramp up biofuel blending quotas but there has been disagreement over whether to start it this year or the next, sources said.
Lawmakers from farm states, ethanol and biodiesel groups and corn farmers have been pushing the administration to propose immediate steps such as reallocating waived volumes into 2020 blending quotas.
But a final agreement is yet to emerge in writing.
Perdue said EPA’s Aug. 9 decision to issue 31 waivers to oil refiners was “unfortunate” and said to help remedy it, the U.S. Department of Agriculture presented proposals focusing on demand. These included strengthening infrastructure to allow more widespread use of E15, a higher-ethanol blend of gasoline.
The tug of war between the rival oil and corn industries is a growing headache for Trump, who must appease both constituencies as he eyes re-election in 2020. Throughout his successful 2016 campaign Trump championed ethanol but also courted the oil industry.
American farmers have borne the brunt of Trump’s trade war with China and he has rolled out around $30 billion in aid packages to offset their losses and seek to ensure their loyalty.
‘NOT ANOTHER HIT’
Any redistribution of waived volumes or lifting of the annual biofuel mandates will upset the oil industry, which rejects farmers’ arguments that waivers hurt ethanol demand.
“The waivers are reducing demand for biofuels and decreasing the value of our crop,” said Matt Frostic, president of the Michigan Corn Growers Association. “After six consecutive years of depressed commodity prices, on top of a challenging growing season, farmers can’t afford to take another hit.”
Perdue also said he held a meeting with Wheeler and Energy Secretary Rick Perry on Wednesday over the blend wall, which is the maximum amount of ethanol that can be blended into gasoline.
U.S. regulations require refiners to blend biofuels into their gasoline or buy credits to fund those refiners who can. Small refiners can seek exemptions, but Trump’s EPA has vastly expanded the waiver program and in August granted 31 exemptions.
The move has infuriated the ethanol industry, after several plant closings and production cuts due to low margins, which contributed to a flood of criticism directed at Trump last week.
Reporting by Humeyra Pamuk in Washington and Rajesh Kumar Singh in Decatur, Illinois; Editing by Marguerita Choy and Matthew Lewis