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Sizing Up Biofuels Future in Trump EPA
By Todd Neeley
Friday, December 6, 2024 9:32AM CST

LINCOLN, Neb. (DTN) -- While agriculture and biofuels groups are trying to get a handle on where Lee Zeldin stands on biofuels, Sen. Pete Ricketts, R-Neb., said on Wednesday the former New York congressman told him he changed his anti-biofuels views from his time in the U.S. House of Representatives.

Ricketts said during a press briefing that he came away from his meeting with Zeldin believing he should be supported as administrator of the EPA.

"We talked about his past and I actually asked him directly about his past opposition to biofuels and he responded with 'Hey, I am for biofuels now,'" Ricketts said.

"He also reiterated that President Trump supports biofuels and that he is going to work on the many things. So, I'm very confident that he is going to take a positive attitude for biofuel and should get confirmed."

As previously reported, Zeldin is on record as having opposed the Renewable Fuel Standard in various letters to EPA. Read the story here: https://www.dtnpf.com/….

Ricketts said he talked with Zeldin about a number of issues, including the need for permanent, year-round E15 availability across the country and electric vehicles.

"What I would like to see is a rollback of the EV mandate because it's stifling American innovation," Ricketts said.

"So, what I'm looking for from the EPA is to have just an even shake here with regard to what the technologies are. We ought not to be picking winners and losers. What we ought to be able to do is say, hey, follow the current law that we got and let's also make sure that we're promoting all the forms of innovation we can."

MIXED BAG

During a biofuels webinar Wednesday, University of Illinois Agricultural Economist Scott Irwin said a second Trump administration should bring some positive developments for ethanol and corn, as well as some concerns.

Irwin said there is potential for the new administration to address E15 permanently and to reduce expected ethanol and corn demand loss from expanded EV adoption by rolling back CAFE standards that favor EVs.

More broadly, Irwin said Trump's energy policy is likely to include a growth in domestic crude oil production, putting climate change policies on the backburner and the use of tariffs to protect domestic production.

Potential negative implications for corn and ethanol under Trump 2.0, Irwin said, is a revision or rollback of the 2022 Inflation Reduction Act, a continued push by merchant refiners for RFS small-refinery waivers, and the potential for EPA to set renewable volume obligations for ethanol at the E10 blend wall.

In a corn and soybean outlook published on Thursday, CoBank said there is upcoming demand risk for corn in the coming weeks that may be exacerbated by biofuels policy uncertainty.

"There is considerable uncertainty in biofuel policy with the ongoing delay in releasing details on the 45Z clean fuel tax credit and the potential risk of increased small-refinery exemptions from the Renewable Fuel Standard that were more common in the previous Trump administration," according to the report, https://www.cobank.com/….

"The small-refinery exemptions allow specific refineries from having to comply with the RVO (renewable volume obligation) targets. Each of these may curtail demand for corn ethanol during an already difficult time for this industry."

On the bright side, CoBank said, export demand for corn is up with total U.S. export commitments up by 39% with Mexico since the previous year.

Irwin said despite the potential EV pressure on ethanol and corn demand, ethanol production should continue to rise slowly as export demands increase and potential E15 expansion continues.

BIOFUELS GROUPS

Biofuels groups contacted by DTN say the industry needs the Trump EPA to promote market certainty primarily by putting the RFS back on time.

Based on the current schedule, 2026 RFS volumes would be finalized one year later.

It should be noted the Biden administration's so-called set rule that included RFS volumes for multiple years, set overall volumes at an all-time high.

Scott McPheeters, a Gothenburg, Nebraska, farmer and vice chairman of the Nebraska Ethanol Board, said farmers and biofuels producers need to see Trump "uphold the integrity" of the RFS.

Not only do biofuels interests say they want to see EPA return to the on-time release and finalizing of volumes, but to set volumes that drive growth.

"More specifically, the renewable volume obligations must be set to levels that foster growth of renewable fuels and the EPA should not allow for the abuse of small-refinery exemptions as a method to avoid compliance," McPheeters said.

In addition, he said EPA should "work to unleash" the capability of ethanol-blended fuels to lower costs for consumers and to improve U.S. energy security through year-round E15. McPheeters said the Trump administration should revisit the CAFE standards that mandate EVs, as well.

"As they stand, these standards represent a thumb on the scale for electrical vehicles by automatically assuming they are zero emissions," McPheeters said. "We know this isn't true once you begin to factor in the full lifecycle emissions including battery production and electricity generation."

RFS VOLUMES FIRST

Brian Jennings, CEO of the American Coalition for Ethanol (ACE), told DTN one of Trump's first actions should be to finalize RFS volumes for 2026 and beyond.

"All market participants benefitted from the multi-year nature of the 'set' rule through 2025 and we will want to see at least two if not three years of proposed RVOs this time around," Jennings told DTN. "Obviously we need to see robust volumes to grow the market for higher blends."

Jennings said because Zeldin co-sponsored "anti-RFS" legislation as a member of Congress, biofuels producers will "need to be vigilant" in ensuring the agency sets "robust" RVOs and "avoid abusing the small-refinery exemption." ACE also expects to be advocating for the Trump administration to adopt the GREET model for lifecycle modeling in the RFS.

OPTIMISTIC ON TAILPIPE RULES

On the EV front, Jennings said "we are optimistic" that the Trump EPA could potentially replace Biden-era tailpipe rules that support primarily EVs with a "more practical approach to incentivize clean octane in fuel and the use of higher ethanol blends" in flexible-fuel vehicles.

"If the Trump EPA is looking for a 'win-win' solution for both fossil and renewable fuel interests," Jennings said, "ensuring a strong future for liquid fuel use in internal combustion engines should be at the top of their list."

Jennings said that approach is "actually a better result" for the environment than a BEV (battery electric vehicles) mandate that "relies on an analysis that fails to take into account the full environmental implications of BEV manufacturing and use."

The industry needs to see Congress pass legislation to make E15 available year-round across the country and for the Trump administration to "look for creative way to support and promote" E15, Jennings said.

BIOMASS-BASED DIESEL

Paul Winters, director of public affairs and federal communications at the Clean Fuels Alliance America, said his group's top priority is to have "timely" RFS rules that support growth in biomass-based and other advanced biofuels.

"In its 2023 set rule, EPA missed the mark on all advanced biofuels and feedstock supplies -- the agency set biomass-based diesel volumes at just over 3 billion gallons for 2024, and U.S. producers will generate 4.5 billion gallons this year," Winters told DTN.

"EPA also discounted any production of renewable jet fuel, naphtha, or propane, which are growing along with renewable diesel because they're co-products. The rule is wasting an opportunity to build advanced domestic energy resources and boost rural economic prosperity."

The delay in the release of 2026 RFS volumes has put pressure on the industry, he said.

"All stakeholders need to know the volumes well in advance of the compliance year," Winters said, noting that Clean Fuels has notified EPA the group intends to sue over the missed deadline.

Additionally, Winters said EPA needs to ensure any small-refinery exemptions granted are accounted for in the annual RFS calculations.

Like other biofuels groups, Winters said Clean Fuels wants to see the next Trump administration have a "rational" heavy-duty truck tailpipe emissions policy that "allows carbon fuels to compete."

A PLACE FOR FLEX FUEL VEHICLES

Geoff Cooper, president and CEO of the Renewable Fuels Association, said in addition to having "strong" RFS volumes for 2026 and beyond, his group wants the new administration to not "abuse or misuse" small-refinery exemptions.

On the E15 front, Cooper said Trump's previous attempts to make sales permanent year-round failed in the courts, meaning federal legislation seems to be the likely path and preferably before summer 2025.

Cooper said the Trump administration should freeze the EPA's light-duty vehicle tailpipe standards until the federal court system decides a number of pending legal challenges to the standards.

"EPA should suspend implementation of the standards -- which effectively serve as a mandate on automakers to build more EVs and far fewer internal combustion engine vehicles -- until it has direction from the courts on a path forward," Cooper said.

"At the same time, EPA should consider restoring previous mechanisms -- or creating new ones -- to encourage and reward automakers for building more FFVs (flexible fuel vehicles), which can run on lower-cost, lower-carbon liquid fuels like E20, E30 and E85."

Growth Energy said in a statement to DTN it expects the Trump administration to help solve the E15 issue as, "President Trump was a staunch supporter of E15 and we expect that to continue," the group said.

In addition, Growth Energy hopes to see a "robust and growing" RFS with "limited" small refinery exemptions and volumes for corn ethanol of at least 15 billion gallons.

And because EPA has "continually failed to properly consider" the role biofuels plays in reducing emissions, Growth Energy said it would like to see the Trump administration "recognize the importance of high-octane liquid biofuels" without favoring certain technologies.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on social platform X @DTNeeley


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