Top Stories
Top Stories
Wires

UPDATE 2-U.S. agriculture secretary pledges Trump will announce way to boost biofuel demand

Humeyra Pamuk

biofuel demand@ (Adds details, more Perdue comments)

WASHINGTON, Aug 28 (Reuters) - President Donald Trump will announce a plan to boost demand for biofuels, which farmers and producers say has suffered from waivers the administration has issued exempting oil refiners from requirements to blend ethanol into the U.S. fuel supply, Secretary of Agriculture Sonny Perdue said on Wednesday.

The Trump administration has scrambled Cabinet members for several weeks now to churn out a plan that would quell an uproar among American farmers after the Environmental Protection Agency's (EPA) decision to grant 31 biofuel waivers to small oil refineries.

Perdue was speaking at an agriculture policy forum as part of the Illinois Farm Progress Show. He did not provide a timeline for when the president would make the announcement.

"This is news the president wants to deliver..over the mitigation" of small refinery exemptions, Perdue said.

He added that the U.S. Department of Agriculture has presented proposals on strengthening infrastructure to allow more widespread use of E15, a higher ethanol blend of gasoline.

The tug of war between rivaling oil and corn industries is a growing headache for Trump, who struggles to appease these two crucial constituencies as he eyes re-election in 2020. Throughout his 2016 campaign that brought him to power, Trump championed ethanol but also courted the oil industry.

American farmers have born the brunt of Trump's trade war with China and he has rolled out around $30 billion in aid package to offset their losses to ensure this key voter base stays loyal to him.

Last week Trump summoned Perdue and EPA chief Andrew Wheeler and a few White House advisors to come up with a solution that will boost biofuel demand. Among the proposals circulated was to ramp up biofuel blending quotas to account for the waived volumes but there has been disagreement over when to start it, this year or the next, sources said.

Any redistribution of waived volumes or lifting of the annual biofuel mandates will upset the oil industry, which dismisses farmers' argument that waivers hurt ethanol demand.

"The waivers are reducing demand for biofuels and decreasing the value of our crop," said Matt Frostic, president of the Michigan Corn Growers Association. "After six consecutive years of depressed commodity prices, on top of a challenging growing season, farmers cant afford to take another hit."

Perdue also said he held a meeting with Wheeler and Energy Secretary Rick Perry on Wednesday over the blend wall, which is the maximum amount of ethanol that can be blended into gasoline.

"We had a meeting yesterday with DOE (Department of Energy) and EPA over determining what the blend wall is, which really effects a lot of policy," Perdue said. "We have to come to an agreement about that."

Sources have said a final agreement on how to move forward on the issue is yet to be finalised and put in writing.

U.S. regulations require refiners to blend biofuels into their gasoline or buy credits to fund those refiners who can. Small refiners can seek exemptions, but Trump's EPA has vastly expanded the waiver program and in August granted 31 exemptions.

The move has infuriated the ethanol industry, which has seen several plant closures and production cuts due to low margins and triggered a flood of criticism directed at Trump last week. (Reporting by Humeyra Pamuk Editing by Marguerita Choy)