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Trump’s ethanol moves: good policy or corn country politics?

At a Tuesday campaign rally in Iowa, President Trump announced plans to lift the ban on summer sales of gasoline with 15 percent ethanol, known as E15. This move is opposed by oil companies and environmental groups but supported by the agricultural sector. John Yang speaks to Grant Gerlock from Harvest Public Media, who explains the changes and how they could impact the midterm elections.

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  • Amna Nawaz:

    Next: The subject of energy production was front and center during a campaign-style rally President Trump held in Council Bluffs, Iowa, last night.

    John Yang has the story.

  • John Yang:

    In the heart of corn country, President Trump made good on a campaign pledge to farmers.

  • President Donald Trump:

    My administration is protecting ethanol.

  • John Yang:

    The president told a Council Bluffs, Iowa, rally that he's directing the Environmental Protection Agency to lift the ban on summer sales of gasoline with 15 percent ethanol, known as E15.

  • President Donald Trump:

    We are unleashing the power of E15 to fuel our country all year long.

  • John Yang:

    The move is a boon for corn farmers squeezed by low prices for their crop and by foreign tariffs.

    Ethanol is a biofuel made from corn. Since 2007, it has been blended with gasoline. Most gas today contains some ethanol. It was once touted as a greener fuel source, but, increasingly, environmentalists oppose expanding its use. They argue the effects of growing more corn offset ethanol's benefits.

    Also against the move, oil companies. They have long opposed ethanol and say high ethanol fuel can damage engines in older cars. The Trump administration's EPA has waived some rules requiring ethanol's use in gas at the behest of oil producers.

  • President Donald Trump:

    I made that promise you during to you during the primaries, remember? I made that promise. Promises made, promises kept.

  • John Yang:

    Politically, the president's move is seen as an effort to bolster farm state Republicans in tight races this fall, including some he singled out during Tuesday's rally. In addition, allowing year-round sales of high ethanol blends has been sought by Iowa Republican Senator Chuck Grassley, who successfully shepherded the confirmation of Supreme Court Justice Brett Kavanaugh.

    Mr. Trump said the administration would move quickly to have the new rules in place by next summer.

    For a closer look at how the fortunes of corn factor into nearly everything in farm country, particularly during an election year, we turn to Grant Gerlock. He's a reporter with Harvest Public Media, and he's based at PBS member station NET News in Lincoln, Nebraska.

    Grant Gerlock, thanks for joining us.

    Explain to us the pressures that corn producers are facing right now. And how big a deal is this to expand the use of ethanol?

  • Grant Gerlock:

    Well, corn prices have been down in the dumps for a few years now.

    And farm income has been on a downward trend for several years in a row. And you mentioned the stress from the tariffs and those disputes with China and Mexico and Canada. And so farmers have been looking for any kind of good news that might point towards signs that maybe prices would increase and that incomes could come back up a little bit.

    And so they look at E15 as something that could use more corn, because that's the most common thing that ethanol is made from. And if E15 is widely used in the U.S. — and that would take a lot of work — it could use more corn. That would be more demand for their corn that they sell, and would help prices and all those things on down the line.

    But it's just good news, when there's been a lot of bad news coming their way.

  • John Yang:

    And explain to us why E15, why these higher ethanol blends were banned in the summer months.

  • Grant Gerlock:

    Well, E15 wasn't even approved as a motor fuel until, in 2011, EPA approved it for most cars and trucks built after 2001.

    And when they did that, they kept this restriction for about three-and-a-half months over the summer from June to mid-September. And the reason they did that was because of smog. That's the concern. E15 is more volatile than regular gasoline. And so it's a bigger risk for causing ozone pollution.

    There are many parts of the country where smog is a problem during the summer months. And if there's smog pollution, it can be bad for your health, especially if you have asthma or COPD or other respiratory illnesses. So they try to keep that smog down.

    That's one reason E15 wasn't allowed to be sold during that time of the year. But the trick, especially when you talk to ethanol — ethanol groups about this, is that during those summer months, when you can't buy E15, you could still buy E10, the 10 percent blend of ethanol, which has about the same impact on ozone and those smog issues.

    So they really saw that more — as more of a technicality. The reason E10 can be sold in the summer and not E15 is because E10 was given a waiver, and E15 didn't have that waiver. That's what they're looking for the EPA to do. That's what the president is directing the EPA to do.

  • John Yang:

    And as we said in the tape piece, that this is an unlikely alliance between environmentalists and the oil industry against the president's proposal.

    You mentioned the increased smog from E15, but there are other — environmentalists have other arguments against this.

  • Grant Gerlock:

    Well, one thing they argue is that ethanol was supposed to be the lower-carbon fuel. And, in their view, it hasn't measured up to that promise.

    Now, the EPA stands by their finding that ethanol made from corn is still a reduction in greenhouse gases compared to regular gasoline. But there have been a number of studies that raised that — raise questions about that, especially when it comes to looking at the impact on land use.

    When ethanol was first being built up, the industry was being built up, a lot of farmers saw this as a great opportunity, because prices were going up. And so they took land that was in use for other things, like making hay or pasture, and they started farming corn on that land. That came with a release of carbon when those grasslands were plowed up to raise corn for ethanol.

    And there are other things that come along with that, habitat and the impact on water quality, if there are issues with fertilizer running into the water. So, those are things that environmental groups look at. They'd like to counteract some of those effects that they see from increased production of corn to produce ethanol.

  • John Yang:

    And, quickly, the oil industry says this would damage older cars. What's the argument there?

  • Grant Gerlock:

    Yes, it would damage older cars. They talk about that a lot.

    But the broader issue for oil companies is that, if you're using E15, you're using 5 percent more ethanol in your gas tank. And that's 5 percent of ethanol that you're using, instead of gasoline made from oil. And this is at a time when consumption of oil for gasoline has been on a downward trend.

    So we have got a shrinking pie here, and they're not looking to give another 5 percent away to the ethanol industry. And so they have really stringently opposed this kind of expansion of ethanol production and consumption. And you see that in the people who support it and oppose it.

    Ted Cruz has been one of the biggest critics of E15 expansion to year-round, E15. And some of the big supporters have been Joni Ernst from Iowa. So you have oil state in Texas, corn state in Iowa on opposite sides of this issue.

  • John Yang:

    Grant Gerlock of the PBS station NET in Nebraska, thank you very much.

  • Grant Gerlock:

    You got it.

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