July 24, 2018, by Jarrett Renshaw
WASHINGTON (Reuters) – The U.S. Environmental Protection Agency’s acting administrator said on Tuesday he would follow up the work of his predecessor to overhaul the nation’s biofuel policy, including pursuing changes strongly opposed by the powerful corn lobby like counting ethanol exports toward annual biofuels quotas.
The biofuel industry had been hoping that Andrew Wheeler would drop some of former Administrator Scott Pruitt’s overhaul efforts, which were aimed at helping the oil industry, and instead prioritize the interests of farmers in the U.S. heartland to expand domestic markets for corn-based fuel.
Wheeler said the agency was open to changes sought by the biofuel industry, but only if it made concessions too.
“When everyone is complaining about the program, we need to look at ways to change the program,” he said.
The comments at a briefing with reporters were among the first by Wheeler on such policy issues since Pruitt resigned as EPA administrator earlier this month in the face of ethics controversies.
Efforts to bring the rival corn and oil groups together around an overhaul to the Renewable Fuel Standard failed under Pruitt, but Wheeler said his decades of experience in Washington could make a difference.
The RFS requires refiners to blend increasing amounts of biofuels like corn-based ethanol into the nation’s fuel supply each year, or purchase blending credits from those that do. The policy has helped farmers by creating a 15 billion-gallon market for ethanol, but has rankled some refining companies that say it costs them a fortune.
Wheeler also said the agency wanted a “50-state solution” to the nation’s vehicle emissions standards, as the EPA opens the door to weakening Obama-era efficiency targets over the objections of California.
President Donald Trump’s administration is expected as early as Thursday to propose revoking California’s power to set state vehicle emissions rules, setting up what is likely to be a protracted legal battle between the state and Washington.
“We don’t want to see two different standards for the country,” Wheeler said.
Wheeler said he met last week with Mary Nichols, the head of California’ Air Resource Board, and shared the administration’s opinion.
Standards set under former President Barack Obama called for roughly doubling by 2025 the average fuel efficiency of new vehicles sold in the United States to about 50 miles (80 km) per gallon – something the Trump administration has called too onerous for the auto industry but which proponents said could help spur innovation in clean technologies.
On biofuels, Wheeler said the agency would keep pursuing changes to the U.S. Renewable Fuel Standard that Pruitt sought, including counting ethanol exports toward the nation’s annual biofuels blending quotas.
Such a move would reduce costs for the refining industry by effectively lowering the domestic biofuel blending quota, and anger the corn lobby by undermining U.S. demand.
He added that the agency could also look at changes that would help the biofuel industry, like expanding the sale of higher-ethanol gasoline blends and by requiring some refiners to blend more ethanol to compensate for volumes lost under an EPA waiver program for small refiners.
Reallocating the volumes would be a concession to the corn industry, which has said the waiver program undermines demand for corn-based ethanol.
But Wheeler said any of those changes would need to come as a package deal, and would not be adopted piecemeal.
Under the RFS, refineries up to 75,000 barrels per day can seek exemptions from the law each year if they can prove compliance would cause them financial hardship.
The EPA issued data this month that said it granted 48 such waivers for the years 2016 and 2017, representing some 2.25 billion gallons of biofuels, significantly higher than under Obama.
The surge in waivers has caused the cost of compliance credits to plummet, saving refiners hundreds of millions of dollars. Wheeler said the lower credit costs should lead to fewer exemptions in the future.
“If credits cause a hardship, it would only make sense the lower credit costs reduce the hardship,” Wheeler said.
Reporting by Jarrett Renshaw; Editing by Peter Cooney