op-ed

Trump Makes The Ethanol Establishment Great And That Is YUGELY Bad

In 2016, Pennsylvania helped put a Republican in the White House for the first time in 28 years, an astonishing political turn from blue to red.  People like Ryan O’Callaghan, the United Steelworkers Local 10-1 president in Linwood, Pennsylvania, made this happen by urging his union members to vote for Trump.

“I voted Donald Trump, I urged my members to vote for Donald Trump, and I urged them to ask their families and friends to vote for Donald Trump,” Callaghan told the Wall Street Journal last month.

But now, Callaghan says, “we’re left out in the cold,” because of the ethanol lobby’s stranglehold over the Trump administration.  The blue collar, middle class workers Trump vowed to protect are hurting because of the ethanol lobby.  Yet ethanol-laden agricultural advocacy from people like former Missouri Senator Jim Talent a few weeks ago continues to promote a wasteful energy “rip-off” that harms the environment.

Key to this issue is whether to implement indispensable reforms in the Renewable Fuel Standard (RFS) system established under President George W. Bush. The RFS ensures that fuel sold in the United States contains a certain amount of renewable fuels as tracked by Renewable Identification Numbers (RINs).  Refiners must collect RINs to verify to the EPA their RFS compliance.

Several problems with the RFS structure cry out for reform.  First, companies blending renewable fuels can sell RIN credits to non-blending companies. This favors large refiners with blending capabilities over small refiners that must buy RIN credits in order to satisfy RFS compliance production percentages to the EPA.  Since 2010, the RIN market has skyrocketed from less than $1 billion to about $15 billion.

This scheme’s increasing cost severely hurts independent refiners — including in Pennsylvania.  Philadelphia Energy Solutions paid $10 million for RINs in 2012, but will have to spend $300 million this year, reported the Wall Street Journal.  Because of this devastating cost increase, Philadelphia Energy Solutions has had its credit downgraded and has had to fire 70 workers.

The system’s structural problems and lack of EPA oversight easily expose the RFS to fraud. The past few years have seen at least eight major RIN fraud cases totaling hundreds of millions of dollars in losses.

The case surrounding Maryland’s Clean Green scam is typical: Rodney Hailey’s inventiveness in manipulating RINs produced a fake biodiesel production company in a storage unit. He invented 25 million RIN numbers and sold them to refiners for $42 million. The EPA never inspected Clean Green and only the suspicion of his neighbors, aroused when bought several luxury cars, exposed his scheme.

Clearly the RIN system, under which fraudsters make a killing while refiners go bankrupt, needs reform.

Initially it appeared that the Trump administration would consider RFS reforms. That is, until Sen. Grassley from ethanol’s corn-producing heartland in Iowa threatened to block Trump’s EPA nominees unless the administration left RFS alone.

A handful of Republican senators and 30 Democrats then joined Grassley. In a letter they pressured Trump against RFS changes.  Trump buckled and abandoned RFS reforms, betraying Pennsylvania workers facing possible job losses next year.

This is not what Pennsylvania blue collar workers who voted Republican red for the first time in nearly 30 years expected from putting Trump in the Oval Office. Rather than draining the ethanol swamp, President Trump is alienating the very people he championed on the campaign trail.

Now is the time for Donald Trump to do what he said he would do in standing up for the working class against special interests like King Ethanol, something even Iowa politicians like Rep. Steve King are willing to do. The RFS and RIN system must change.

Andrew Harrod is an attorney and a freelance writer.


The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.