Trump to meet with USDA, EPA chiefs on Thursday over biofuels policy: sources

FILE PHOTO: U.S. President Donald Trump returns after travelling to the AMVETS convention in Kentucky, at the South Lawn of the White House in Washington, U.S. August 21, 2019. REUTERS/Tasos Katopodis

WASHINGTON/NEW YORK (Reuters) – President Donald Trump, faced with mounting anger in the farm belt over policies that allowed oil refineries to use less corn-based ethanol, is set to meet with cabinet members on Thursday to discuss ways to boost biofuel demand, four sources familiar with the matter said.

Trump is scheduled to meet with Agriculture Secretary Sonny Perdue and Environmental Protection Agency (EPA) Administrator Andrew Wheeler at the White House, the sources said. They said the officials will present him with options on how to boost ethanol demand which farmers say has slumped since Trump’s EPA granted exemptions from ethanol requirements to dozens of oil refineries.

One proposal will include reversing some of the waivers the administration has granted to refineries, sources said. “There are a number of potential solutions in the memo. One is to reverse some of the waivers,” said one source familiar with the plans that will be presented to Trump.

A second source said another option was to redistribute the waived volumes prospectively beginning in next year’s annual biofuel mandate. There were other infrastructure related options to help boost the use of E15, a higher ethanol blend of gasoline.

American farmers, a constituency Trump is counting on in his campaign for re-election in 2020, have seen crop prices slump and export markets shrink due to his trade war with China. On Wednesday, several industry groups and farm-state lawmakers complained to the White House about waivers granted to oil refineries, exempting them from their obligation to blend corn-based ethanol into gasoline.

The farm and industry groups have complained that Trump is favoring the oil industry at their expense. Refiners, along with some academics, have dismissed the farm belt’s contention that waivers have decimated ethanol demand.

Trump has faced a major backlash after his exemption decision, with national and state trade groups from Iowa, the largest producer of ethanol in the country and lawmakers ramping up pressure on the White House to fix the issue.

Iowa, the largest U.S. producer of corn and ethanol, is a swing state won twice by Democrat Barack Obama. The state switched to the Republican candidate in 2016, in part because Trump promised to support ethanol.

Renewable fuel credits for 2019 rose on Thursday morning, trading at 16.5 cents each, up from 14.75 cents each the previous session, traders said. The credits have steadily climbed from trading at 11 cents apiece two weeks ago as refiners sought to actively buy in the market.

Reporting by Humeyra Pamuk and Stephanie Kelly; Editing by Chizu Nomiyama and David Gregorio