Trump plans ethanol boost amid farm belt voters in Iowa, sources say

During a campaign event in Council Bluffs in October, President Donald Trump touts a policy change on E-15 fuel that has promised to expand the market for corn-based ethanol. But now producers worry about a slowdown in the wake of the partial government shutdown. 

WASHINGTON — The Trump administration is poised to allow year-round sales of higher-ethanol blends, and Midwestern biofuel producers are ready to celebrate.

It’s the welcome culmination of seven years of lobbying by policymakers, said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

“I can’t begin to find the proper adjectives to express how exciting it is,” Shaw told The World-Herald. “I’m still knocking on wood because I’m not sure I believe it until I see the ink dry in the federal register.”

President Donald Trump has instructed the Environmental Protection Agency to allow E15 to be sold year-round, eliminating a current prohibition on summertime sales of the fuel, said a senior White House official who spoke on the condition of not being identified.

The agency still must jump through various bureaucratic hoops, but the administration says it hopes to have the change finalized before the 2019 summer driving season.

Trump is expected to tout the move at various events Tuesday, including his stop in Council Bluffs. The event will be held at 6:30 p.m. at the Mid-America Center, with doors opening at 3:30 p.m.

Republicans hope that the ethanol announcement and Trump’s visit will provide some help to GOP candidates in the state, including Gov. Kim Reynolds and Rep. David Young.

Reynolds, in a statement issued Monday evening, called the announcement a "big win for Iowa" and said Trump has shown his commitment to farmers in Iowa and the rest of the country. 

“I have been a tireless advocate for an expanded ethanol market, taking every opportunity to speak with members of the president’s administration — including the president himself — on numerous occasions about the issue," Reynolds said.

The administration says the move will help the economy overall and provide a targeted boost to the agriculture sector, which has been under pressure in part because of trade disruptions.

Officials have long sought in vain for a deal between ethanol producers and the oil and gas industry over the Renewable Fuel Standard, which requires certain amounts of ethanol to be blended into the country’s transportation fuel supply.

Refiners have complained about the cost of RFS compliance credits known as Renewable Identification Numbers, or RINs. Refiners use the credits to prove that they have satisfied annual biofuel quotas.

On the other side, ethanol producers and their Capitol Hill allies say the EPA’s aggressive use of waivers for small refineries has hurt demand for ethanol.

Allowing year-round E15 sales will come with changes to the rules governing RINs: restricting who can purchase the credits, limiting how long they can be held and requiring public disclosure of holdings past certain limits.

The hope is that such changes will help to stabilize RIN markets, but it’s unlikely that the oil and gas industry will be satisfied with those steps.

In fact, oil and gas companies are expected to challenge year-round E15 in court, and their allies on Capitol Hill could attempt to bring pressure to bear as well.

A bipartisan group of 20 senators wrote a letter to the administration last week raising concerns about year-round E15 sales and whether such changes would be legal.

“We urge you to engage in a collaborative and transparent process with robust engagement on any RFS reform efforts,” the senators wrote. But Shaw said that he’s confident that the changes will hold up in court and that they should be in place for the summer driving season.

Year-round sales of E15 isn’t the only issue facing the ethanol industry. It will continue to fight against the small refinery waivers, for example. But this is an important victory and could ultimately significantly increase demand for ethanol, Shaw said.

“This is huge,” he said. “It sets the stage for growth.”

He credited Reynolds and both of Iowa’s U.S. senators for pushing the issue, as well as Nebraska Gov. Pete Ricketts and Sen. Deb Fischer, R-Neb., who introduced legislation to advance the cause.

Ricketts, the Nebraska Ethanol Board and Nebraska corn groups praised Trump's directive in statements issued Monday evening.

“Year-round sale of E15 is great news for Nebraska and our farm families as we continue to work to meet the challenge presented by low corn and soybean prices. More consumption of E15 will increase demand for our commodities and expand the use of cleaner-burning fuel by American consumers,” Ricketts said. 

Shaw gave credit to Trump, who promised during the 2016 campaign to stand with ethanol.

“It feels like he’s going to stick with his campaign promises and deliver a victory for higher-ethanol blends that’s not tied to anything that destroys demand,” Shaw said. “That is a very good day.”

Reporter - Politics/Washington D.C.

Joseph Morton is The World-Herald Washington Bureau Chief. Morton joined The World-Herald in 1999 and has been reporting from Washington for the newspaper since 2006. Follow him on Twitter @MortonOWH. Email:joseph.morton@owh.com

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