Daily on Energy: Ethanol losing the information war on Capitol Hill

One of the biggest shockers for the ethanol lobby was that lawmakers, primarily Republicans, thought that President Trump’s plan to allow for higher blends of ethanol to be sold year-round was a done deal.

“For a lot of lawmakers, they thought the E15 [15-percent ethanol blend] issue was sort of dealt with already,” Brian Jennings, president and CEO of the American Coalition for Ethanol, told John. He said that they heard a lot of: “It’s already taken care for you, right?”

The problem with that perception is that it isn’t taken care of — far from it — despite Trump making it a key part of his agenda in 2019.

In fact, the proposed rule at the Environmental Protection Agency to lift restrictions on E15 ethanol fuel blends has only just begun to work its way through the administrative process, with the oil industry already threatening to sue if it’s approved.

Jennings and his members were on the Hill last week with the intent of getting lawmakers up to speed with the significant problems they have with the pending EPA ethanol plan. However, the feedback they received from members means they have to rethink their lobbying and education campaigns.

Jennings said he and his members had to spend time clarifying that “no, it’s not taken care of for us,” and then go into the details of the EPA rule, which would actually do the opposite of Trump’s intended result by restricting sales of E15.

There are four or five pieces to the E15 rule. The only part of the proposal the ethanol industry favors is the piece that removes the Reid vapor pressure restrictions for using higher blends in the summer, instead of just the fall, winter, and part of the spring. The U.S. consumes the most gasoline in summer, and allowing E15 to be sold in the summer would open up a huge market for the industry.

Jennings was also disappointed in lawmakers’ understanding of the EPA refinery exemption program, which is separate to the E15 rule, but even just as problematic and damaging to the industry, he explained.

Since the beginning of Trump’s presidency, EPA has granted waivers to dozens of oil refineries to free them from blending ethanol into the gasoline supply as required by the law and EPA’s renewable fuel program. The ethanol industry argues that the exemptions constitute “demand destruction” for their product and are currently suing the EPA over its use of the exemptions.

The exemptions have faced pushback from Republican Sens. Chuck Grassley and Joni Ernst of Iowa, but outside of them and a few others, most lawmakers on Capitol Hill aren’t as attuned to the problem, according to Jennings and his group.

Part of the problem is the complexity of the EPA renewable fuel program, or Renewable Fuel Standard, and lawmakers having a hard time keeping track of the problems it and the ethanol industry faces, says Jennings.

Ron Lamberty, vice president for policy for the coalition, told John that some lawmakers and Hill staff are still hung up over ethanol subsidies, not realizing that the primary blending tax credit that they are concerned about was repealed almost a decade ago.

Another issue that confuses lawmakers is the issue of ethanol credits, known as RINs, which are a major piece of the EPA rule for blending more E15.

The RIN changes in the E15 rule would actually undermine the sale of more 15-percent ethanol blends, and are primarily beneficial to refiners. But the subject is one of the most confusing for lawmakers to understand, said Lamberty.

“The RINs thing just confuses way too many, we’ve got to find a way to simplify that,” he said.

He added that many were surprised that there were several other pieces to the Trump E15 regulation, and that the ethanol industry finds most of the rule “troublesome.”

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TRUMP TO ANNOUNCE EXECUTIVE ORDERS TO SPUR PIPELINE DEVELOPMENT: Trump will announce a pair of executive orders this week to help U.S. energy companies more quickly build pipelines and other infrastructure projects by expediting the environmental review process, and weaken states’ ability to block them.

The executive orders aim to “help American energy companies avoid unnecessary red tape,” a White House official told Josh.

What the orders would do: They would seek to incentivize private investment in energy infrastructure, the official said, streamline permitting of projects, and further reduce regulations, “allowing the U.S. to continue to be the undisputed global leader in crude oil and natural gas production for the foreseeable future.”

The Trump administration wants to help industry move a glut of oil and gas in producing areas to consuming areas in New England that suffer high energy prices during the winter because of a lack of sufficient pipelines to deliver fuel.

The Trump administration is also pressing for faster approvals of liquified natural gas terminals to help energy-needy countries diversify their energy sources.

Trump will announce the orders Wednesday in a speech at the International Union of Operating Engineers’ training center in Houston.

Fighting with states: The Trump administration is acting at the behest of the energy industry, which has called for reforms to the National Environmental Policy Act and Clean Water Act.

Progressive states such as New York and others in the Northeast have halted pipeline projects using Section 401 of the Clean Water Act, which requires applicants to prove that potential leaks from an energy infrastructure project would not harm nearby streams or lakes

Federal judges have also delayed the building of major natural gas infrastructure projects in Mid-Atlantic states in response to legal challenges, rejecting permits for the Atlantic Coast and Mountain Valley Pipelines because of deficient environmental reviews.

ClearView, a research group, said in a note Monday that it expects the Trump administration, through the EPA, to direct states to narrow the scope of their review under the Clean Water Act, and encourage them to make decisions faster.

It’s unclear how much of an effect the orders will have: However, ClearView says substantial changes to the Clean Water Act provision requires action by Congress, so it’s unclear how impactful the executive orders will be.

Congressional action is unlikely as Democrats argue streamlining would harm protections for natural habitat and endangered species.

“We don’t think the executive order can stop states from saying no if they have a good reason,” Christi Tezak, a managing director at ClearView who studies energy infrastructure, told Josh.

But Trump is expected to make his case by basing his actions at least in part on national security grounds, arguing exporting U.S. “energy dominance” abroad could help European countries lessen their dependence on oil and gas from Russia.

“The Trump Administration has repeatedly highlighted the importance of midstream connectivity between producing areas and export facilities as a core tenet of its export-focused “energy dominance” strategy, which has national security implications,” Kevin Book, a ClearView managing director studying oil and gas, told Josh.

CALIFORNIA LEADS THE NATION AS GASOLINE PRICES RISE: California’s average price of gasoline crested at around $4 per gallon over the weekend, as the retail fuel prices continue to rise nationwide amid higher global oil prices.

California had some damage to refineries due to last year’s massive wildfires throughout the state. But even without those problems, the Golden State is a geographically constrained market — it is hard to move oil and fuel into the state because of a lack of infrastructure.

California has already seen an average 12-cent spike in gas prices over the last week. In some of the rural areas of northern and eastern California, the price per gallon is already above $4, with the urban centers along the west coast averaging between $3.77 and $3.88 per gallon.

But it is not only California: The nationwide average price for regular gasoline rose nearly 7 cents a week ago to $2.69 per gallon, according to the federal government.

Federal analysts say the increases are a result of a variety of factors affecting the oil market, as well as the spring-switch by refineries to summer fuel blends that tend to be more expensive to make.

TRUMP ADDS PRESSURE ON MADURO BY BLOCKING OIL SHIPMENTS TO CUBA: The Trump administration on Friday increased economic pressure on Venezuelan dictator Nicolás Maduro by sanctioning 34 vessels used by the country’s oil company PDVSA to transport fuel to Cuba.

A senior administration official told reporters that the action could be followed by additional economic measures against Venezuela, in a protracted effort to force Maduro to step down and allow the country’s interim leader, Juan Guaidó, to take complete control.

The official also said that the option of using military force to oust Maduro is still an option.

CALIFORNIA SUES TRUMP FOR WITHHOLDING DATA ON VEHICLE EMISSIONS ROLLBACK: California’s Democratic Attorney General Xavier Becerra sued the Trump administration Friday to force it to provide data supporting its rollback of Obama-era vehicle emissions standards.

The Trump administration claims that a freeze in the fuel standards could prevent 1,000 fatalities from crashes annually and save Americans an average of roughly $2,340 for every new vehicle purchased.

But career experts at the EPA disagreed with the NHTSA on the number of deaths that would be avoided by rolling back the fuel efficiency rules, according to internal documents released in August, and some legal experts say the disagreement could harm the administration’s legal case as it rationalizes the move.

SHELL TO SPEND $300 MILLION ON CONSERVATION PROJECTS: Oil and gas giant Shell announced Monday it will launch a program to spend $300 million over three years on reforestation and conservation projects, including planting more than 5 million trees in the Netherlands. Funding will come from credits that drivers can buy at its gas stations in the Netherlands.

Shell’s announcement comes after the British-Dutch company announced it will leave the refining trade group American Fuel & Petrochemical Manufacturers because its membership conflicts with living up to the goals of the Paris international climate change agreement.

The Rundown

Reuters Midwest floods hammer US ethanol industry, push some gasoline prices toward five-year high

New York Times Blamed for climate change, oil companies invest in carbon removal

Axios Inside John Kerry’s shadow diplomacy on climate change

CNBC Saudi energy minister expects Aramco bond demand at ‘north of’ $30 billion

Calendar

TUESDAY | April 9

All day, The Washington Auto Show official kicks off for the public, April 5-14. This year features autonomous vehicles and all-electric vehicles.

10 a.m., 2123 Rayburn. The House Energy and Commerce Committee’s Environment and Climate Change Subcommittee holds a hearing on the Environmental Protection Agency’s fiscal year 2020 proposed budget with EPA Administrator Andrew Wheeler testifying.

WEDNESDAY | April 10

10 a.m., 2123 Rayburn. The House Energy and Commerce Committee’s Energy Subcommittee holds a legislative hearing on a series of bills aimed at making Americans’ homes, buildings and energy infrastructure more efficient and cost-effective.

THURSDAY | April 11

10 a.m., 366 Dirksen. The Senate Energy and Natural Resources Committee holds its second hearing on climate change to examine opportunities for energy innovation and other potential solutions to help address global warming.