Ethanol RINs Issue Update
By Greg Krissek, CEO
First, I want to thank all of our KCGA members who have taken action on this issue that threatens to significantly cut demand for ethanol, and in turn, lower the price you receive for corn.
What’s the latest?
–This week, we received good news from USDA as Agriculture Secretary Sonny Perdue said that he’s pressing President Trump not to endorse a cap on the price of RINs.
–Last week, Kansas Governor Jeff Colyer signed on to a letter from Midwest governors to President Trump, urging him not to cap RIN prices.
–Also, this week, the American Coalition for Ethanol held a fly-in in Washington DC. I was with one of our Kansas Corn leaders, Dennis McNinch from Ness County, for the meeting, and we conducted Hill Visits on this issue.
Background–The RFS/RIN issue heated up in late February when many corn growers were at the national Commodity Classic. Texas Senator Ted Cruz continues to lead an effort to cap the price of RINs, which are the mechanism that blenders use to prove compliance with the Renewable Fuels Standard (RFS). RINs are traded between fuel blenders who blend ethanol and those who do not blend enough ethanol to be in compliance with the RFS. Senator Cruz wrongly blamed the failure of a Pennsylvania refinery on RIN prices. The true motivation of the Texas senator and the refiners is to lower the amount of ethanol required to be blended in the RFS. I hope you will continue to be outspoken and active on this issue. We are working with NCGA’s Action Center to keep the pressure on the administration to continue its support of the RFS. Link: http://www.ncga.com/public-policy/legislative-action-center?vvsrc=%2fcampaigns%2f57698%2frespond
Where we stand: While it is true the RIN market can been volatile, there is a simple solution that we support. If EPA would simply lift the RVP regulation to allow higher blends of ethanol, like E15, to be sold year-round, RIN prices would level out. This would benefit both the oil refiners and ethanol producers. Simply put, don’t mess with the RFS! READ MORE here: https://kscorn.com/rfs/
So, where are we now with this issue? While discussions continue to take place, the White House meetings on this issue have slowed down. Ethanol industry groups, corn growers, USDA, EPA and the Trump administration continue to discuss the issue. There are many moving parts in this discussion. Corn growers continue to insist that the RVP waiver to allow higher blends of ethanol year-round is a win-win for ethanol and oil.
One positive outcome of our work came this week when Secretary of Agriculture Sonny Perdue, came out publicly against a RIN cap.
Agriculture Secretary Sonny Perdue said this week, he’s pressing President Trump not to endorse a cap on the price of renewable fuel credits (RINs), a flashpoint in the debate over the RFS.
Perdue told reporters after a speech at the National Press Club that capping prices on renewable credits — also known as Renewable Identification Numbers, or RINs — is an overly simple solution to the complexities of biofuel markets. He said he doesn’t know whether the White House will take that approach and that he’s not meeting with U.S. EPA Administrator Scott Pruitt on the issue this week, despite a news report claiming that this morning. He said they met last week to discuss potential solutions and that the USDA position is against price caps.
“We’ve impressed upon him that simple is good in some things but not good in others,” Perdue said. “I don’t know that the president will make that choice; it has been obviously offered early on as a solution, but sometimes simple solutions don’t work for complex problems.”
Perdue continued, “This is a complex issue that I think needs a reasonable solution that doesn’t include a RIN cap.”