Oil industry, green groups join to oppose Trump’s ethanol plan

President TrumpDonald John TrumpReturn hope to the Middle East by returning to the Iran Deal Government shutdowns tend to increase government spending 'Full Frontal' gives six-bedroom house to group that works with detained immigrants MORE is creating strange bedfellows with his proposal to expand ethanol sales, with some environmental groups and the oil industry opposing the new rule.

The groups have different reasons for pushing back against Trump’s plan to remove a key barrier to selling gasoline with 15 percent ethanol (E15), but both say it’s a bad policy and are contemplating suing the Environmental Protection Agency (EPA) if it is finalized.

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Trump on Tuesday directed the EPA to craft a regulation that would allow for sales of E15 year-round. It’s currently prohibited during the summer months due to air pollution concerns.

Oil companies and green groups say Trump’s proposal is a politically motivated move designed to shore up support for Republicans ahead of the November midterm elections. Farmers are hurting as a result of Trump’s trade policies, which have prompted foreign tariffs on U.S. agricultural goods.

“Ethanol blended in gasoline does produce more pollutants that lead to smog than gasoline alone,” David DeGennaro, agricultural policy specialist with the National Wildlife Federation, told The Hill. “So by increasing the amount from 10 percent to 15 percent, that breaks those limits that are in the Clean Air Act and could potentially lead to more ozone formation.”

The oil industry, however, has a different concern. They’re worried that the change would reduce the incentive for the ethanol and corn industries to negotiate major reforms to the Renewable Fuel Standard, the federal policy that requires fuel refiners to blend specified amounts of ethanol into gasoline.

Oil companies also stand to sell less traditional gasoline, while their costs could go up, if Trump’s plan is implemented.

“I can’t overstate how disappointed we are with this decision by the president,” said Chet Thompson, president of American Fuel and Petrochemical Manufacturers, which represents fuel refiners.

“We have been working with the administration for a long time trying to find a path forward that can work for everybody,” he said. “The president certainly has indicated he wanted to find a solution that works for both sides of this issue. But unfortunately, what he has now instructed EPA to do doesn’t come close to that.”

To move forward with Trump’s request, the EPA is developing a regulatory proposal that would have to be made available for public comment. The EPA would then have to review the comments before finalizing the rule, possibly in time for next summer.

Trump told reporters aboard Air Force One on Tuesday that the process of changing the ethanol policy at the EPA would move fast. “It’s all going to go very quickly,” he said.

Opponents of the rule can file lawsuits challenging the rule after it’s finalized.

Environmental advocates and the oil industry both say the new policy would violate a Clean Air Act provision that limits the volatility of fuels that can be sold. The EPA has concluded numerous times, most recently in 2011, that allowing E15 in the summer — when ozone pollution levels are highest — would violate the law.

“What he’s telling EPA to do is unlawful,” said Thompson. “If the president moves forward, it leaves us zero options but to challenge it.”

Trump argued Tuesday that the policy is a win-win and follows through on his pledge to Iowans in 2016 to strongly support ethanol.

“It’s great for our farmers, and it was a promise I made during the campaign,” Trump told reporters before leaving Washington for a rally in Iowa.

Trump also rejected arguments that using the ethanol blend year-round would compromise air quality.

“It has no impact, 12 months,” he said. “In fact, there are those who say, ‘You do this and the air is cleaner. You go 12 months instead of eight and the air is actually cleaner.’ ”

A senior administration official on Monday pointed to changes that Trump is directing the EPA to make to the trading market for Renewable Identification Numbers, the credits that some refiners have to buy in order to demonstrate compliance with the ethanol mandate. Trump is asking the EPA to put new restrictions on who can buy and sell credits and how long they can hold them, among other policies intended to keep prices low.

But the oil industry says that wouldn’t help them.

“The administration’s proposal to put limits on fuels trading markets could make matters worse,” Mike Sommers, president of the American Petroleum Institute (API), said in a statement.

Environmental concerns with higher ethanol blends go beyond air quality. Some green groups have long complained that using ethanol leads to the destruction of ecosystems by prioritizing corn growth and that greenhouse gas emissions from ethanol’s life cycle aren’t much lower than they are for traditional gasoline, a conclusion that the ethanol industry disputes.

“If E15 were to become the standard gasoline, it implies a 50 percent increase in ethanol production. And so far, we don’t see any reason to think the vast majority of that new ethanol wouldn’t be corn ethanol,” said Jonathan Lewis, senior counsel at the Clean Air Task Force.

“Corn ethanol has pretty big impacts on water quality, on soil preservation, on habitat preservation and on climate,” he said.

On the oil side, objections include the impact on engines. The API says most cars on the road can’t handle E15, not to mention smaller engines in vehicles like motorcycles and boats.

“Putting a fuel into the marketplace that the vast majority of cars on the road were not designed to use is not in the best interest of consumers,” Sommers said. “Vehicle compatibility tests have shown that high ethanol levels in gasoline can damage engines and fuel systems.”

But pro-ethanol groups are cheering.

“He answered the call from American farmers by removing the single most important barrier to growth in higher biofuel blends,” said Emily Skor, CEO of Growth Energy. “This announcement is great news for farmers, biofuel workers, retailers and consumers everywhere who want to enjoy cleaner, more affordable options at the fuel pump.

“This is a critical step toward giving American motorists higher-octane options at a lower cost all year long,” she added.

Supporters also see it as a victory for free markets and the environment.

“This is the right signal to the marketplace at just the right time, as both farmers and renewable fuel producers desperately need new market opportunities and sources of demand,” said Geoff Cooper, president of the Renewable Fuels Association.