A meeting between President Donald Trump and senators representing both the oil and corn industries failed to yield an agreement on how best to lower the cost of the United States` biofuels policy to refiners.
"No deal made," said Republican Senator Charles Grassley of Iowa, a key participant in the talks representing corn growers, in a post on Twitter after the meeting.
Trump had called the meeting amid rising concern in the White House over the current state of the U.S. Renewable Fuel Standard (RFS), a law requiring refiners to mix biofuels such as corn-based ethanol into their fuel.
The decade-old policy, intended to help farmers and reduce U.S. petroleum imports, has increasingly divided two of Trump`s most important constituencies. A refining company in the key electoral state of Pennsylvania last month blamed the regulation for its bankruptcy.
The meeting included Republican Senators Ted Cruz of Texas and Pat Toomey of Pennsylvania - both from major oil refining states - along with Grassley and Joni Ernst of major corn grower state Iowa.
Environmental Protection Agency Administrator Scott Pruitt, Agriculture Secretary Sonny Perdue, and Energy Secretary Rick Perry were also due to attend, according to sources briefed on the meeting.
The White House confirmed the meeting, but did not immediately comment after it concluded. Representatives for the other senators and the agencies also did not immediately comment.
Under the RFS, refiners must cover the costs of blending increasing volumes of biofuels such as ethanol into the nation`s gasoline and diesel each year. To prove compliance with the EPA-administered program, they have to acquire credits called RINs, either by earning them through blending, or buying them.
As biofuels volume quotas have increased over the years, so have prices for the credits. That has been good news for companies that blend the fuels, but refiners that do not have their own blending facilities are facing rising costs.
Oil refiner Philadelphia Energy Solutions (PES)
Reuters reported that other factors may also have played a role in the bankruptcy, including the withdrawal of more than $590 million in dividend-style payments from the company by its investor owners.
Other refiners, such as vocal RFS-opponent Valero Energy Corp
America`s biggest ethanol producers include Archer Daniels Midland Co
At least four options aimed at reducing the cost of RINs to refiners like PES were up for consideration, two sources familiar with the agenda of the White House meeting said.
One was to count U.S. ethanol exports toward annual biofuels volume mandates, something not currently permitted under the policy. Another was to place a hard cap on the price of a RIN, and a third was to limit RIN trades to blenders and refiners - essentially to remove market speculators, the sources said.
To sweeten the deal for the corn industry, any deal would have likely included a waiver to allow gasoline containing 15 percent ethanol to be sold year round. Sales of high-ethanol blends are currently restricted during the summer due to concerns over smog.
In his Twitter post, Grassley said the proposals presented at the White House meeting were "not `win win`" and would "destroy ethanol demand."
U.S. farm groups had urged Trump in a letter on Monday not to weaken the RFS, calling it a critical engine of rural jobs. "Any action that seeks to weaken the RFS for the benefit of a handful of refiners will, by extension, be borne on the backs of our farmers," the groups said.
While the White House meeting focused on fixes that could be implemented with executive or regulatory action, there is a separate legislative effort to alter the RFS, led by Republican Senator John Cornyn of Texas. But it too faces stiff resistance from corn states.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)