Via Financial Times

A brief peace between the Trump administration and US grain farmers was at risk after his environmental agency published the details of a biofuels policy they had broadly praised 11 days before.

The policy deals with exemptions small oil refineries may receive from a rule requiring set amounts of corn ethanol to be blended into petrol. In early October, the administration said it would compensate for any corn ethanol sales lost to the exemptions, winning cheers from the farm and ethanol lobbies.

On Tuesday, the applause turned to dismay after the Environmental Protection Agency released more precise information in a 20-page notice. The lobbyists said it would not buttress ethanol as promised.

The Iowa Corn Growers Association said it was “outraged”. Emily Skor, chief executive of ethanol group Growth Energy, said it was “unconscionable”. The proposal “falls short of delivering on President Trump’s pledge”, said Geoff Cooper, president of the Renewable Fuels Association.

About 40 per cent of the US corn crop is processed into fuel ethanol, making the biofuels industry important to rural Midwestern states that are critical to President Donald Trump’s re-election chances in 2020.

The number of biofuel exemptions granted to oil refineries has increased sharply under Mr Trump, angering farmers who believe the waivers undermine ethanol and biodiesel demand.

EPA earlier said the agency would ensure that more than 15bn gallons of corn ethanol be blended into the US fuel supply in 2020, as required by statute.

Tuesday’s notice said the agency would offset exemptions by applying any lost volumes to other fuel companies, but that it would calculate the relief based on a three-year average of past exemptions that had been recommended by the US Department of Energy.

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Mr Cooper said that using such a method of calculating exemptions could undercount the actual number of exemptions the EPA grants next year. “We are concerned that the volume of actual exemptions granted in 2020 could very well exceed the amount of projected exemptions from DoE, putting us right back into the quagmire where the 15bn gallon requirement is eroded and undermined,” he said.

The National Farmers Union said the proposal would increase biofuel use by 770m gallons per year, less than the 1.35bn the industry had expected based on the initial announcement.

Critics of the proposal appeared careful to aim their fire at the EPA, whose administrator was appointed by Mr Trump, rather than at the president himself.

“The ethanol and biodiesel industries have a lot of cause to distrust EPA and that is understandable,” said Senator Chuck Grassley, the senior US senator from Iowa and a longtime biofuel champion. “But President Trump brokered this deal and any attempt to undermine it from EPA would represent a betrayal of the president.”