Broin to present ‘two-year timeout’ concept to White House
Jeff Broin, the founder of POET, a South Dakota company that builds and manages ethanol plants, plans to present the White House with a proposal to multiply the number of Renewable Identification Numbers and reduce compliance costs, according to a one-page document his company provided The Hagstrom Report.
A meeting was scheduled for last week, but the timing is now uncertain.
Politico reported that it would include members of the administration and executives from the biofuels and oil industries, but no elected officials.
Politico also reported that Vice President Mike Pence would lead the meeting, but later reported that Pence would not be present because was in New York.
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A Broin spokesman he believed that the meeting was off the schedule.
The meeting would be the third at the White House on the conflict between the ethanol and oil industries. President Donald Trump ran two earlier meetings attempting to resolve the conflict between Sens. Ted Cruz, R-Texas, and Pat Toomey, R-Pa., who have proposed a cap on the price of RINs, and midwestern senators led by Charles Grassley, R-Iowa, who say reducing the price would lead to a reduction in the use of ethanol.
The paper says, “Merchant refiners claim that RFS compliance is too costly. A temporary two-year program could be designed to immediately multiply the number of D6 RINs, reducing compliance costs while encouraging the use of higher biofuel blends. The renewable volume obligation for conventional biofuels would remain unchanged at 15 billion gallons, upholding the goal of the RFS.”
The paper also makes other proposals.
Meanwhile, on Friday the American Coalition for Ethanol, the National Farmers Union, American Soybean Association and the National Biodiesel Board restated their opposition to a cap on RINs.
In a call to reporters in which retailers explained the role that RINs play in their operations, ACE CEO Brian Jennings said that a cap on the RINs price at any level is “unacceptable. It is just another way for EPA (the Environmental Protection Agency) to waive the RFS.”
The courts have ruled that EPA cannot waive the RFS, and if EPA does waive the RFS, ACE and other groups will go to court to try to stop it, Jennings said.
NFU President Roger Johnson said in a news release, “NFU opposes a cap on RIN prices because it would undermine the RFS and disincentivize blending of home-grown, renewable fuels in our transportation sector. Production of these biofuels is vital to family farmers and rural communities right now, as farm incomes are less than half of what they were just four years ago.”
“Not only is a RIN cap harmful to American agriculture, it is a sellout of farmers and a handout to refiners. The administration should simply lift the summertime restriction on the sale of E15, which would both boost ethanol production and decrease costs for refiners by instituting new RINs. NFU strongly urges the administration to reject any RFS deal that includes a cap on RIN prices.”
American Soybean Association President John Heisdorffer, who farms in Keota, Iowa, said in a release, “Placing any cap on the price of RINs is a misguided step that destroys demand for biodiesel and other renewable fuels.”
“Analysis from the National Biodiesel Board and the World Agricultural Economic and Environmental Services shows up to 300 million gallons in biomass-based diesel volumes would be lost each year as these volumes would no longer be utilized for compliance with the RFS conventional biofuels requirements.”
Heisdorffer added that “this idea is simply unnecessary. The RFS program is working as intended — diversifying our nation’s fuel supply, increasing energy security, reducing fuel emissions, and promoting markets for farmers and rural America.”
“RFS stakeholders, including petroleum refiners, have stated that biodiesel is not a problem, yet all of the proposed RFS revisions would first and foremost adversely impact biodiesel,” Heisdorffer said.
“Reduced biodiesel production equals reduced demand for soybean oil, hurting the bottom line for soybean farmers and adversely impacting rural economies. We’re already facing great market uncertainty as a result of the tariffs and trade issues. Action to cap RIN prices and undermine the RFS will exacerbate the economic damage to farm families like mine.
“Soybean farmers remember President Trump’s promise to protect the RFS, and imposing a cap on RIN prices would break that promise. We call on the president to reject this RIN cap concept and keep his word to protect the RFS,” Heisdorffer concluded.
The National Biodiesel Board said a new analysis by NBB and WAEES found that capping the price of conventional biofuels’ RINs “will significantly harm the production of biodiesel and related industries.”
“Although some believe that limiting the price of RINs for the conventional biofuels market won’t harm biomass-based diesel volumes, the analysis made it clear that a price cap on conventional ethanol RINs would result in lower volumes of biomass-based diesel produced and used in the United States,” the group said.
“Capping the price of conventional ethanol RINs would devastate the biodiesel industry — swiftly and significantly reducing the amount of volumes produced and people employed,” said Kurt Kovarik, NBB’s vice president of federal affairs.
“Satisfying the whims of fewer than five refiners isn’t worth the resulting harm to millions of workers in U.S. agriculture and livestock production, as well as American consumers,” Kovarik said. “President Trump can sniff out a good deal from a bogus one, and we are hopeful that he will stick with his campaign promise and reject a cap on RIN prices.”
The analysis found that capping the price of conventional ethanol RINs would lead to: A reduction of up to 300 million gallons in biomass-based diesel volumes each year, in part because these volumes would no longer be utilized for compliance with the conventional biofuels requirements; $185 million more in feed costs for livestock producers, likely leading to an increase in food costs for consumers; 16 cents less per bushel of soybeans.
NBB said the analysis showed that if the price of RINs is capped “soybean producers would receive approximately 16 cents less per bushel in 2020 due to reduced demand for their products.”
“On the flip side, the price of soybean meal — i.e., the protein, not the oil for biodiesel production — will increase more than $5 per short ton. As a result, livestock producers are expected to pay roughly $185 million more in feed costs due to a cap on RINs. A similar impact can be expected for other oilseed meals, such as canola. These increased costs may negatively impact consumer food costs.” ❖
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