When Bob Dinneen stepped up to address the National Ethanol Conference this week, the house was packed. The CEO and president of the Renewable Fuels Association is an undoubted highlight of the event, bringing his passion and energy to the sometimes unequal struggle and the assembled crowd was effusive in its applause as he drew his remarks to a close.
Rattling through some of the highlights, Dinneen noted 2016 had been a strong year for the US ethanol industry – the fourth straight year of profitability, record production topping 15.3 billion gallons, record net exports, strong performances from co-products such as DDGS, record domestic demand.
Coming into the conference, uncertainty seemed to be the watchword of the new era – the proposal and arrival of Scott Pruitt at the Environmental Protection Agency played havoc with RIN prices, which swayed and shimmied and ultimately pointed downwards as market participants sought to fathom what the arrival meant for biofuel policy. Political commentators have pored over every utterance that candidate Donald Trump made on the campaign trail to try and figure out the now-president’s position on agriculture, renewables, biofuels and big oil.
But after seizing on the positives, Dinneen sought to remind pollsters, and the new administration, that – far from the disgruntled blue collar vote turning blue states to red – it was the agriculture community that came out for Trump.
218 counties went Republican from Democrat, 133 of which were counties wherein at least a million bushels of corn is grown. “The counties switching in Pennsylvania, Ohio, Michigan, and Wisconsin were not the industrial base, but farm country,” Dinneen boomed, with 93% of the ethanol produced in 2016 coming from a county that voted for Trump, along with 91% of the corn grown. Dinneen corralled Trump’s own campaign words and produced a barnstorming argument that played to the businessman’s core interests. By any measure, the US ethanol is working, is a success, and has potential to grow. Assurances should be due.
Many have made the point that President Trump’s administration is unpredictable. Maybe so in some regards but, as major car and weapons manufacturers have discovered, it’s better to be inside the camp looking out than outside looking in. Reason and logic may not always be apparent, but good business sense is hard to argue with. The opening paragraphs were packed with figures, contributions to GDP and to the Treasury, employment data and opportunity – Dinneen highlighted the shared interests in getting to grips with regulation, freeing up the industry from costly requirements on undenatured ethanol amongst others.
It yielded tangible results in a letter from the White House that chimed entirely with many of the themes Dinneen had identified and assured that “your President and this Administration value the importance of renewable fuels to America’s economy and to our energy independence.” Climate, however, was conspicuous by its absence, although an omission that Dinneen addressed directly when lambasting the EPA’s use of outdated assumptions in measuring ethanol’s emissions contributions and the hope that the incoming Pruitt can get to grips with the question.
It was a combative performance, an in-the-trenches, fervent call to arms from a leader who was introduced as “the most effective lobbyist in Washington.” It was a call to reinvigorate an industry that is arguably already performing and already delivering. In aligning itself with the Trump agenda, Dinneen also moved through a familiar theme when he focused on the question of trade. Acknowledging that free trade agreements were a key plank for many, Dinneen pointedly drew out the Trump commitment to undo bad FTAs, but promote good trade – and, sensing the mood from the White House, took the opportunity to slam Europe’s “blatantly illegal anti-dumping duties” and linking the failure of previous administrations to fight for the industry to the more recent situation with China and its efforts to clamp down on DDGS and limit ethanol imports.
But it’s difficult to hide the challenges that remain within – and the lingering frustration over the apparent ceiling that demand has hit, declining production of flexible-fuel vehicles – fundamental to the adoption of higher blend E85’s – as incentive schemes are withdrawn, and support for higher octane and the potential reforming of the Renewable Fuel Standard itself. And for all talk of the promotion of trade, the EU and China may prove tougher nuts to crack yet.
Next year, the NEC will move back to Texas, and to San Antonio. The city is home to a key part of America’s identity, culture and history – woven into the fabric and conscience of the very nation itself – the Alamo. Despite the potential parallels, there’s no sign here that the industry is making preparations for its final stand.