US to ramp up biofuel quotas to ease farmer anger

Stephanie Kelly, Humeyra Pamuk, Jarrett Renshaw –

The Trump administration is considering ramping up biofuel blending quotas in the coming years to assuage anger in the Farm Belt over its recent broad use of waivers for small refineries, but is not planning to rescind any of the exemptions it has granted so far.
The approach would mark a mixed result for the agriculture industry and its backers who had been pushing the administration to revoke some of the exemptions, which they argue hurt demand for corn-based ethanol by freeing refiners from their obligation to blend biofuels into their products.
The proposals emerged a day after US President Donald Trump summoned his Agriculture Secretary Sonny Perdue and Environmental Protection Agency Administrator Andrew Wheeler to the White House to discuss ways to boost biofuel demand.
The meeting was set after Trump’s decision this month to allow the EPA to grant 31 biofuel waivers to oil refiners caused an uproar in farm states key to the Republican president’s re-election bid in 2020.
In the meeting, Trump rejected a proposal from the Department of Agriculture to rescind some of the recently approved waivers, according to the sources and a list of items that were largely agreed upon at the meeting’s conclusion.
Instead, the administration is considering lifting its proposed 2020 annual corn-based ethanol mandate by 500 million gallons and 2021 biodiesel mandate by 250 million gallons. It is also looking to reallocate volumes expected to be waived going forward.
Sources said work was still needed to hammer out a plan before end-November, when the mandate is due to be finalised.
“Most of the issues outlined are going to be finalised as we move towards November 30,” one industry source with knowledge of the discussions said. “Apart from the rescinding of waivers, conversation on the other items will continue,” he said.
The EPA in July had proposed setting the volume of biofuels refiners must blend into their fuel at 20.04 billion gallons in 2020, up from 19.92 billion gallons in 2019. That included 15 billion gallons of conventional biofuels like ethanol, unchanged from 2019. The EPA also proposed setting the 2021 biodiesel volume at 2.43 billion gallons, unchanged from 2020.
Any redistribution of waived volumes or lifting of the annual biofuel mandates will upset the oil industry, another key constituency for Trump, illustrating his difficult balancing act in accommodating the rivalling corn and oil industries.
US regulations require refiners to blend biofuels into their gasoline or buy credits from those that do. — Reuters