Energy

Trump Allows For Expanded Ethanol Sales As Chinese Tariffs Squeeze Farmers

REUTERS/Jonathan Ernst

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Michael Bastasch Energy Editor
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The Environmental Protection Agency (EPA) announced Friday it would allow the year-round sale of higher ethanol gasoline.

EPA Administrator Andrew Wheeler said the agency was fulfilling President Donald Trump’s promise to Midwestern agriculture states, which have been hit hard by retaliatory Chinese tariffs.

EPA previously restricted the sale of “E15” gasoline — fuel blended with 15 percent ethanol — in summer months over air pollution concerns. Wheeler also announced transparency measures to comply for the Renewable Fuel Standard (RFS).

Midwestern lawmakers and agriculture interests cheered the news as a way to expand corn sales, which are expected to take a hit this year as China cuts U.S. crop purchases. (RELATED: Trump’s Tariffs Put Mexico In A Tough Spot. Here’s How They Could Retaliate)

“We’ll see an increased demand for corn, thus creating an economic booster for our state’s growers,” Iowa Republican Sen. Joni Ernst said in a statement.

Sen. Joni Ernst (R-IA) asks a question as U.S. Attorney General William Barr testifies before a Senate Judiciary Committee hearing on Capitol Hill in Washington

U.S. Senator Joni Ernst (R-IA) asks a question as U.S. Attorney General William Barr testifies before a Senate Judiciary Committee hearing on Capitol Hill in Washington, D.C., U.S., May 1, 2019. REUTERS/Aaron P. Bernstein.

Corn exports are forecast to fall $1.4 billion this year, according to the U.S. Department of Agriculture (USDA). China was also the third-largest destination for U.S. ethanol exports, but that trade stopped in response to tariffs on Chinese goods.

“We kind of look at it as a key that finally unlocks the door to greater demand opportunities in the long term,” Geoff Cooper, chief executive of the Renewable Fuels Association, told The Wall Street Journal.

“I’d characterize this as a shot in the arm, but the farm economy and the ethanol industry are still very sick,” Cooper said.

The Trump administration has offered $28 billion in aid to farmers since 2018, including $16 billion in direct payments approved in May.

However, Trump’s appeasing agriculture interests did not go over well with refiners, environmentalists and conservative groups that have long opposed year-round E15 sales.

Environmentalists warn that selling E15 in summer could exacerbate smog pollution in parts of the country. Though, E15 supporters say higher biofuel blends improve air quality through lower tailpipe emissions.

U.S. President Donald Trump meets with China's Vice Premier Liu at the White House in Washington,

U.S. President Donald Trump meets with China’s Vice Premier Liu He in the Oval Office of the White House in Washington, U.S., April 4, 2019. REUTERS/Jonathan Ernst.

Conservatives added that E15 is damaging to small engines found in outdoor equipment, like in lawn mowers, ATVs, jet skis, boats and motorcycles.

“I hope Joni Ernst and Chuck Grassley know how to fix small engines. Everyone should send their ruined equipment to them,” Dan Kish, distinguished senior fellow at the Institute For Energy Research, told The Daily Caller News Foundation.

Refiners have long opposed the federal biofuel mandate, which holds them financially accountable for compliance. The RFS was initially passed in 2005, but expanded in 2007 to mandate ever-increasing amounts of biofuels be blended into the fuel supply.

Purchasing credits, or RINs, to meet RFS mandates costs refiners billions of dollars. The American Fuel and Petrochemical Manufacturers (AFPM), which represents refiners, said it would sue the Trump administration.

“EPA has left us no choice but to pursue legal action to get this unlawful rule overturned,” AFPM president Chet Thompson told WSJ.

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