Trump administration likely to announce details of biofuels deal by Friday: sources

Source: By Stephanie Kelly and Humeyra Pamuk, Reuters • Posted: Thursday, October 3, 2019

(Reuters) – The Trump administration is expected to announce today details of a U.S. biofuels policy deal to help farmers angry over waivers granted to refiners exempting them from using corn-based ethanol and other biofuels, four sources familiar with the matter said.

The White House has held weeks of discussions with farm- and oil-state senators and executives at oil refiners and officials at biofuels producers.

Three of the sources said the plan would be unveiled on Friday at 9 a.m. EDT (1300 GMT), while the fourth did not specify the time. A White House spokesman declined to comment.

In August, President Donald Trump promised a “giant package” related to ethanol, after his administration angered the powerful corn lobby by granting 31 oil refineries exemptions to their biofuel blending mandates under the Renewable Fuel Standard.

Big Oil and Big Corn are key political constituencies for Trump. For years, the two sectors have clashed over the RFS, which requires the refining industry to blend ethanol and other biofuels into the nation’s gasoline.

The law has helped farmers by creating a 15 billion gallon market for ethanol, but upset the oil industry, which views biofuels as competition and has complained that the regulation can cost refineries a fortune.

As part of the RFS, the EPA can exempt small refineries if they prove compliance would cause disproportionate economic hardship. EPA’s decision to grant the 31 waivers to mandates opened a new schism between the two sides, which Trump hopes will support him in next year’s presidential election.

The agriculture industry has said waivers cut ethanol demand, hurting growers whose export sales have suffered due to the U.S.-China trade war. The oil industry says the exemptions protect refining jobs and have no impact on the amount of ethanol used.

As Reuters has reported earlier, the pending deal is expected to include a boost in biofuels blending quotas for coming years based on a three-year rolling average of total biofuels gallons exempted from the RFS mandate. It will also include plans to boost consumer access to E15 gasoline, a blend with 15% ethanol instead of more common E10 blends.

As part of the deal, the EPA would also use partial exemptions for some refiners, with the aim of reducing the impact of the waivers. It is not expected to include an oil industry request for caps in the price of biofuel blending credits that refiners must earn or buy to comply with the RFS.

Trump’s EPA has vastly expanded its use of RFS waivers, granting them to refineries owned by profitable oil majors like Exxon Mobil Corp and Chevron Corp. It has also routinely provided full exemptions to refineries even when the Department of Energy has recommended only partial relief.

Reporting by Stephanie Kelly and Humeyra Pamuk; Editing by David Gregorio and Tom Brown