Daily on Energy: Grassley warns that Trump’s ethanol plan hangs in the balance without China trade deal

The Trump ethanol plan will lift restrictions on higher blends of ethanol — 15% ethanol blends to be precise — and expand the market for the corn-based fuel.

Grassley sees this as “a big positive,” while at the same time warning that a cloud hangs over the president’s promise to Iowa and farmers.

“With these tariffs on, it practically does away with the benefit of E15,” the senator told John in an exclusive interview.

The Chinese trade delegation led by Vice Chairman Liu He continued talks with the Trump administration on Friday after reports that China reneged on major parts of a preliminary deal with the United States.

Trump enacted new tariffs ahead of the talks on Friday in response to China’s back-peddling. Earlier threats of tariff hikes by Trump rattled markets and cast doubt over the negotiations.

But Grassley doesn’t think the deal is lost. “I don’t think they’d be coming here if they wanted to throw in the sponge,” he said, noting that if they wanted to back out they would have just emailed Trump, rather than show up for talks.

“Unless they are coming here just to use our free press to get wider dissemination of their point of view that they’re fed-up with negotiating with the United States,” he said.

“The entire global economy would benefit if the two biggest economies on the globe were to reach an agreement on freer trade,” he said.

U.S. agriculture in his state and many others fell victim, early on, from Chinese retaliatory tariffs in response to Trump’s first round of tariffs on Chinese goods. Ethanol exports to China have flatlined in China, but soybeans have seen some recovery.

China is one of the largest importers of soybeans, but the market analysts in the last few days say they are worried the recovering could be over.

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MEANWHILE … GRASSLEY ISSUES DEFENSE OF ETHANOL AND RENEWABLE SUBSIDIES: In response to free-market criticism of ethanol and wind energy subsidies, Grassley issued a defense of his work to preserve these programs, which he said always started with the national interest, with the intention of phasing them out over time.

His reason: “We have so many young reporters, and even editorial writers, now, particularly those that might be against government promotion of alternative energy,” Grassley told John in the interview, saying he wanted to clear the air on why he has promoted renewable fuels and alternative energy.

Grassley said he wants editorial writers, including those at the Washington Examiner, to dive deeper into the reasons for the policy before categorically condemning the government’s promotion of alternative forms of energy.

He said that writers have to go back to the policy environment of the 1970s, ‘80s, and even the ‘90s, to understand what the country was faced with in adopting these alternative energy policies, including ethanol incentives and the national Renewable Fuel Standard that requires the fuel to be blended in the nation’s gasoline supply.

“If we knew in 1980 what we know now, none of this alternative energy would have gone ahead,” he said, noting that the rise of shale oil and natural gas in the last decade has changed the energy landscape.

“But the environment starting with the Arab oil embargo of the mid-1970s, through our running out of oil and natural gas, we sought through every conceivable renewable energy and using a tax credit as a way of promoting that alternative energy, because we want to be less dependent on the volatile area of the Middle East,” Grassley explained.

He noted that these subsidies, including the production tax credit for wind turbines that he championed, were not meant to be in place in perpetuity.

When it’s time to stop: When the technology, or industry, “gets to be mature, you stop it,” he said. And Congress has done that with the repeal of volumetric excise tax credit for ethanol, he added. The wind and solar industries have also been placed on a phase-out path.

Next year is the last year for the tax credit for wind, and 2021 is the last year for solar energy credits, he said. Grassley is also currently working on a six-year phase out of tax credits for the renewable fuel biodiesel.

He wants writers to keep those facts in the back of their minds when penning articles about tax credits, but also wants lawmakers to dig deeper into these issues.

Grassley believes the vast majority of young lawmakers on Capitol Hill do not understand how these policies came into place.

FORMER REP. CARLOS CURBELO TO TESTIFY AT WAYS AND MEANS CLIMATE HEARING: Former Republican Rep. Carlos Curbelo of Florida will be among those testifying at next week’s House Ways and Means Committee hearing focused on climate change, Josh and John have learned. The committee’s Democrats, led by chairman Rep. Richard Neal of Massachusetts, invited Curbelo to testify.

Curbelo will be focusing his testimony on the benefits of a carbon tax. Last year, before losing his seat in Congress, Curbelo was the first Republican in nearly a decade to introduce national carbon pricing legislation.

The Ways and Means Committee hearing, scheduled for May 15, is focused broadly on the “economic and health consequences of climate change. But the committee would have jurisdiction over any carbon pricing legislation that Congress might consider, so it figures to be a prominent topic.

INSLEE CALLS FOR NATIONAL ‘CLIMATE CONSERVATION CORPS:’ 2020 presidential candidate and Washington Gov. Jay Inslee proposed Thursday creating a “National Climate Conservation Corps” to encourage young people to work in the clean energy economy.

Inslee said the jobs program would allow young American to “create sustainability solutions” in their communities, by offering job-training and employment opportunities for jobs such as retrofitting buildings, installing rooftop solar panels, and clearing a backlog of public lands projects.

The program would partner with labor unions, businesses, technical schools, non-profits, and community development institutions to connect young people with jobs in those fields.

Another component of the program, called the Global Climate Service Corps, would allow young people to serve overseas, working with local partners to implement climate mitigation strategies.

The program “will give young people the opportunity to serve in the domestic and global effort to secure a healthy future,” Inslee said.

This looks familiar: Inslee compared the concept to President Franklin D. Roosevelt’s Civilian Conservation Corps, part of the New Deal during the Great Depression that provided unskilled manual labor jobs to young men related working on the conservation and development of natural resources in rural lands.

Other Democrats have proposed similar programs. Sen. Elizabeth Warren, D-Mass., proposed “a 21st Century Civilian Conservation Corps” in her public lands agenda proposal, while former Texas Rep. Beto O’Rourke proposed “a new AmeriCorps generation” in his climate plan.

BETO BLAMES CLIMATE CHANGE FOR BORDER SURGE: O’Rourke said Thursday that climate change is a reason so many Central American migrants are arriving at the U.S.-Mexico border.

“There were 400,000 apprehensions at our border with Mexico last year. As you know, many of them were kids – kids who, if they were lucky, showed up with their parents,” O’Rourke, who represented the El Paso areas in Congress, said at a campaign stop in Salem, N.H. “But increasingly, we are finding that those who are arriving are farmers from Honduras who are trying to plant what used to grow but does not any longer because they, too, are in historic droughts and cannot feed themselves.

“If you think 400,000 is bad, wait until some countries in the Western Hemisphere can no longer support human life, because that is the direction we are headed,” O’Rourke added.

O’Rourke also referenced competition with the Chinese economy when discussing how to address climate change. “The technologies that will drive this world will be invented by a country on this planet. I would much rather it be the United States than be China,” he said.

CUOMO ADOPTS REGULATIONS TO BAN COAL PLANTS BY 2020 IN NEW YORK: New York Gov. Andrew Cuomo announced Thursday that his government adopted final regulations to require all power plants in the state to meet strict carbon emissions limits, with the goal of ending the use of coal for electricity by the end of 2020.

“As our federal government continues to support the dying fossil fuel industry, deny climate change, and roll back environmental protections, New York is leading the nation with bold climate action to protect our planet and our communities,” said Cuomo, a Democrat.

The impact of the regulations, however will be small. New York only has two operating coal plants.

The regulations become effective on June 8.

They are a part of Cuomo’s “Green New Deal” proposal for New York, which seeks to require the state’s power be 100% carbon-free by 2040.

The Rundown

Reuters Presidential hopeful Biden looking for ‘middle ground’ climate policy

Washington Post Facing Democratic resistance, Interior secretary promotes oil and gas drilling

Greenville News South Carolina solar energy legislation that could lower power bills wins Senate approval

Calendar

TUESDAY | May 14

10 a.m., 366 Dirksen. Senate Energy and Natural Resources Committee holds hearing on mineral security legislation, including the Rare Earth Element Advanced Coal Technologies Act; and the American Mineral Security Act.

2:30 p.m., 366 Dirksen. The Senate Energy and Natural Resources Committee’s panel on forest management holds a hearing to consider eight pieces of legislation, including one to ban oil and gas drilling in national forests.

WEDNESDAY | May 15

10 a.m., 1100 Longworth. House Ways and Means Committee holds its first climate change hearing.

THURSDAY | May 16

10 a.m., 366 Dirksen. The Senate Energy and Natural Resources Committee holds a hearing on the Department of Energy’s carbon capture, utilization, and storage (CCUS) programs and to receive testimony on the Enhancing Fossil Fuel Energy Carbon Technology Act of 2019.