Oil vs Corn: U.S. lawmakers set hearing on fractious biofuels policy

A group of oil tankers moored at a Texas oil refinery just outside of Houston, Texas.  Photo: ArtWager/E+/Getty Images

The U.S. oil and corn industries will continue a long-running public battle over America’s biofuels policy on Tuesday during a Congressional hearing about the Trump administration’s use of “secret waivers” for refineries.

The hearing set by the Energy and Commerce Committee will air out the grievances of two key political constituencies heading into next year’s election at a time President Donald Trump has been working hard to win them over.

Trump’s Environmental Protection Agency this month announced a change to the nation’s biofuel policy, intended to please farmers, that would increase the amount of corn-based ethanol some oil refineries must to blend next year to make up for volumes it has waived.

Under the U.S. Renewable Fuel Standard, the refining industry must blend 15 billion gallons of ethanol every year, but small individual facilities can secure exemptions if they prove compliance would cause them disproportionate economic harm.

Trump’s EPA has vastly expanded its use of the waivers, which are issued confidentially, triggering a backlash among representatives of the corn industry who claim the exemptions are lucrative handouts to Big Oil and hurt farmers by cutting ethanol blending volumes.

The move to adjust the program to make up for the waivers starting next year was intended to appease the Farm Belt, but biofuels companies have instead reacted angrily – saying the proposal failed to make up for the impact of the waiver program so far and fell short of the administration’s promises.

“It falls short of delivering on President Trump’s pledge to restore integrity to the Renewable Fuel Standard and leaves farmers, ethanol producers, and consumers with more questions than answers,” Geoff Cooper, the head of the Renewable Fuels Association, said shortly after the proposal was issued.

The oil industry, meanwhile, also dislikes the proposal. Refiners see ethanol as competition for petroleum-based fuels and argue the EPA’s proposal unfairly forces big refineries to bear the burdens of their smaller competitors.

The refining industry also refutes accusations that the waivers have impacted overall demand for ethanol, arguing that the U.S. trade war with China has been a much bigger factor behind falling agricultural commodity markets.

The hearing will include testimony from the RFA, the heads of two biofuel companies, and the president of the American Fuel and Petrochemical Manufacturers refining lobby group.

— Writing by Richard Valdmanis

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