On the campaign trail last year, candidate Donald Trump promised to “do all that is in my power as president” to achieve the goals of the Renewable Fuel Standard, the 2005 law that requires petroleum refiners to use increasing volumes of renewable fuels like ethanol and biodiesel.
Farmers and biofuel producers across the Midwest enthusiastically welcomed that pledge and took it to heart. On Election Day, they overwhelmingly cast their votes for Trump, helping him to win key battleground states like Iowa, Ohio and Wisconsin and pull off an upset over Hillary Clinton.
But less than a year after the historic election, President Trump’s pick to run the Environmental Protection Agency, Scott Pruitt, doesn’t appear to be making good on his boss’s promise on the RFS. Instead, through a recent series of questionable actions, Pruitt seems to be undermining the president’s stated commitment to the program. And after EPA’s latest moves on the RFS, alarm bells are starting to ring across rural America.
In June, EPA issued a proposal to reduce the total 2018 RFS renewable fuel blending requirements below the levels required in 2017. While the EPA proposal kept intact the volume of conventional biofuel (mostly corn ethanol) mandated by Congress for 2018, it slashed the requirement for waste- and residue-derived cellulosic biofuels by nearly one-quarter. The proposed cut is already dealing a blow to ethanol plants across the country that are in the midst of adopting technologies to produce cellulosic biofuel from grain residues. Our company, Pacific Ethanol, has already successfully installed cellulosic ethanol technology at both of our California plants, and we were evaluating whether to make similar investments at our facilities in Idaho, Illinois, Nebraska and Oregon. EPA’s proposal was certainly not the signal we were looking for.
Adding further intrigue to the June proposal was the revelation — through public records — the first draft submitted to the White House by EPA actually included a 23 percent increase in cellulosic biofuel requirements over 2017 levels. But just days before EPA officially published the proposal, the cellulosic volume was curiously reduced.
Then, in late September, EPA stated it is considering further reductions to the 2018 RFS volumes, going beyond the cuts proposed in June. This time, EPA said it is pondering a decrease in the requirements in an effort to shut out biodiesel imports from Argentina and Indonesia. But cutting the RFS would not materially affect import volumes; more likely, it would force some domestic producers to shutter. It would also ignore the fact the RFS is intended to drive domestic consumption of biofuels without regard to where it was produced. In any case, imports have played only a small role in meeting RFS requirements historically, constituting just 7 percent of 2015 and 2016 volumes.
And now, there are rumors swirling that Pruitt’s EPA is considering a scheme in which U.S. biofuel export volumes would count toward compliance with the RFS. Logically, exported volumes don’t currently count in meeting RFS obligations. That’s because the RFS was designed to reduce U.S. dependence on imported petroleum by driving domestic consumption of renewable fuels. How would the RFS help us achieve our energy security goals if the program is rigged to incentivize biofuel exports?
All of these recent actions by Pruitt are designed to stifle growth in American renewable fuel production and consumption, lock our fuel markets into the status quo and take the pressure off oil refiners who complain about the costs of complying with RFS mandates. Not only would these moves by EPA inflict economic harm on the very farm communities that helped President Trump win the election, but consumers would suffer from limited choices and higher prices at the pump as well.
Fortunately, this impending wreck can be avoided. As these actions are only proposals at this point. It’s not too late to make sure the RFS stays on track in 2018. But President Trump needs to get engaged. He needs to be made aware his EPA administrator is veering off course with the RFS and threatening to undermine the promises he made to voters in the heartland.