Daily on Energy: Trump’s ‘win-win’ for ethanol leaves refiners out in the cold


TRUMP’S ‘WIN-WIN’ FOR ETHANOL LEAVES REFINERS OUT IN THE COLD: The Environmental Protection Agency on Friday made year-round sales of 15% ethanol legal, while leaving out provisions that the president promised would address price concerns raised by oil refiners.

The EPA action to allow E15 sales in the summer months was met with praise by farming groups and the ethanol industry, while lobbyists for refiners were less than thrilled.

“The President promised that the move to allow greater summertime ethanol use would be coupled with serious market reforms for the [ethanol credit] compliance program,” said the Fueling American Jobs Coalition, which represents refineries.

The coalition said the E15 rule, without enacting reforms to the ethanol credit market, clearly violates the spirit of President Trump’s deal and could harm the livelihoods of refinery workers, who will bear the brunt of higher credit prices.

The EPA cut out the more aggressive aspects of its original proposal to track the ethanol credit market, which was part of the original E15 proposed rule. Inclusion of the measures were part of a “win-win” deal worked out by the Trump administration between the refiners and the ethanol industry, meant to ensure that prices for the ethanol credits are kept in check.

The credit prices had experienced volatility in recent years, raising the cost for refiners to comply with EPA’s Renewable Fuel Standard that requires them to blend billions of gallons of ethanol into the market each year.

Market reforms not ready for prime time: Industry experts said some of the aspects of EPA’s original proposal to monitor for market volatility were not ready for prime time. EPA did approve two of the less contentious aspects of the market plan in Friday’s rulemaking.

EPA air office chief Bill Wehrum told reporters on a call that most of the market proposals were removed from the final rule for one simple fact: “We have not found any clear evidence of market manipulation."

Coming court battle: The ethanol industry, meanwhile, celebrated the rule as a major win for corn farmers and renewable fuels, despite the fact that they may face a court battle over EPA’s actions.

The American Petroleum Institute has warned for months that allowing year-round blending of 15% ethanol oversteps the limits put in place by the Clean Air Act, and is essentially illegal. It also places consumers at risk of misfueling by filling up with E15, which could damage their engines.

“EPA has acted outside its statutory authority in granting year-round E15 and rushed through the rulemaking process in order to meet an arbitrary deadline,” said API Vice President of Downstream and Industry Operations Frank Macchiarola. “This premature policy attempts to push E15 into the market before it is ready.”

Wehrum told reporters that the rule is based on a rock-solid legal foundation, in which the agency firmly believes it has the authority to waive previous restrictions on E15 to allow its sale during the summer driving season.

The summer driving season officially kicks off on Saturday, June 1.

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TRUMP’S TWO-FRONT ATTACK ON CLIMATE SCIENCE, REGULATIONS FACES CHALLENGES: The Trump administration is fighting on two fronts to help justify its deregulatory agenda in court, downplaying both the damage from climate change and the public health benefits of environmental rules.

This month, the EPA announced plans to propose new rules for regulatory cost-benefit analysis that critics fear could undermine the agency's regulation of climate pollution by saying it costs too much.

At the same time, the agency plans to reexamine how government scientists study the consequences of climate change by potentially limiting consideration of worst-case projections.

Legal experts critical of the Trump administration’s deregulatory approach told Josh the maneuvers together are designed to weaken legal and public scrutiny of the damages from its pro-business, hands-off approach to climate change.

“This is an across the board effort to find a way to sideline facts and science that are inconvenient to the administration’s thesis that any regulation has some cost to industry,” said David Hayes, executive director of the State Energy and Environment Impact Center.

The Trump administration has justified its review of cost-benefit analysis and climate change modeling by arguing previous administrations have overstated the cost of carbon emissions and underestimated the impact of regulations to state and local economies.

Court challenges are coming: However experts said the Trump administration’s effort would be blocked in court.

“It's totally crazy to promote a rule that says the indirect consequences of a regulation must be taken into account if they are negative, but can be ignored if they are positive,” said Richard Revesz, an environmental law professor at New York University.

The Trump administration could encounter similar problems with its effort to scrutinize the inclusion of “worst-case scenario” projections in climate modeling.

“Dropping those scenarios is more likely to hurt rather than help the administration in judicial proceedings, since pro-regulation advocates will point to the dropping as additional evidence that the administration has its head in the ground on climate science,” said John D. Graham, dean of Indiana University's School of Public and Environmental Affairs.

US EMISSIONS ROSE IN 2018, NEW DATA CONFIRMS: Economy-wide greenhouse gas emissions increased between 1.5% to 2.5% in 2018, according to new data released Friday by the Rhodium Group.

The rise means the U.S. is not on schedule to meet its greenhouse gas emissions reductions target under the Paris Agreement ofa 26% to 28% cut below 2005 levels by 2025. Saturday is the two-year anniversary of Trump announcing he would pull the U.S. from the Paris pact.

U.S. emissions in 2018 were 10.7% to 11.6% below 2005 levels.

The Rhodium Group report found U.S. emissions’ increases in all major sectors: electricity, transportation, buildings, and industrial.

Behind the trend lines: Power sector emissions had been declining for five years before the increase in 2018. Industrial emissions grew more than any year since 2010. And emissions from transportation remained the largest source for the third straight year.

The Rhodium Group data is consistent with the Energy Information Administration, which projected in January that U.S. emissions increased 2.8% in 2018 — the largest year-to-year rise since 2010.

It attributed higher emissions from last year to an unusually hot summer and cold winter, and increased manufacturing activity.

COST OF RENEWABLE ENERGY REACHES RECORD LOW GLOBALLY: The cost of renewable energy technologies reached a record low last year across the world.

The International Renewable Energy Agency reports the global weighted average cost of solar power decreased 26% in 2018, while onshore wind prices fell by 13%. The cost of hydropower dropped 12% and offshore wind fell 1%.

Cost reductions, particularly for solar and wind power, are set to continue into the next decade, the report found.

More than three-quarters of the onshore wind and four-fifths of the solar PV capacity that is coming online next year will produce power at lower prices than the cheapest new coal, oil or natural gas options.

“We must do everything we can to accelerate renewables if we are to meet the climate objectives of the Paris Agreement,” said Francesco La Camera, director general of the International Renewable Energy Agency.

IRAN TRIED TO DRIVE UP OIL PRICES BY ATTACKING TANKERS, POMPEO SAYS: Four oil tankers damaged earlier this month were targeted by Iran in an attempt to drive up international oil prices, according to Secretary of State Mike Pompeo.

“These were efforts by the Iranians to raise the price of crude oil throughout the world,” Pompeo told reporters Thursday.

Pompeo’s confirmation of Iran’s role came after National Security Adviser John Bolton made the same claim.

"I don't think anybody who is familiar with the situation in the region, whether they have examined the evidence or not, has come to any conclusion other than that these attacks were carried out by Iran or their surrogates,” Bolton told reporters in London earlier Thursday.

The Trump administration and Iranian officials have been rattling sabers for weeks, as the president’s team revoked the waivers that exempted a handful of nations from U.S. sanctions designed to put a severe crimp in Iran’s ability to sell oil abroad.