Trump administration promises biofuel boost to farmers, angering Big Oil


WASHINGTON/NEW YORK (Reuters) – The Trump administration on Friday unveiled a plan to boost U.S. biofuels consumption starting next year to help struggling farmers, a move that cheered the agriculture industry but triggered a backlash from Big Oil.

FILE PHOTO: U.S Environmental Protection Agency Administrator Andrew Wheeler attends a press conference on the One National Program Rule on federal preemption of state fuel economy standards at EPA Headquarters in Washington, U.S., September 19, 2019. REUTERS/Sarah Silbiger

The plan would require a yet unspecified increase in the amount of ethanol that oil refiners must add to their fuel in 2020, and would also aim to remove further barriers to the sale of higher ethanol blends of gasoline like E15, the Environmental Protection Agency said in a statement.

“President Trump’s leadership has led to an agreement that continues to promote domestic ethanol and biodiesel production, supporting our nation’s farmers and providing greater energy security,” EPA Administrator Andrew Wheeler said.

The rules, which will be finalized after a period of public comment, would “ensure that more than 15 billion gallons of conventional ethanol be blended into the nation’s fuel supply beginning in 2020,” the EPA said, without giving an exact number. Any changes to blending volume mandates for 2020 under the U.S. biofuel law, the Renewable Fuel Standard (RFS), must be finalized by Nov. 30.

Before Friday’s proposal, the EPA had called for the refining industry to add 20.04 billion gallons of biofuels, including 15 billion gallons of ethanol, into their fuel in 2020. The Trump administration had also already provided a boost to E15 earlier this year here by lifting an Obama-era ban on its sale during summer months.

The deal is widely seen as an attempt by President Donald Trump to mend fences with the powerful corn lobby, which was outraged by the EPA’s decision in August to exempt 31 oil refineries here from their obligations under the RFS. This freed the refineries from the requirement to blend biofuels or buy credits from those who do.

Biofuel companies, farmers and Midwest lawmakers complained that the waivers undercut demand for corn, which is already slumping due to the U.S. trade war with China. Oil refiners say the waivers protect blue-collar jobs and have no real impact on ethanol use.

“The president listened to all points of view and delivered. Small refineries can still apply for waivers while biofuels are able to blend the legally-required amount,” Republican Senator Chuck Grassley of Iowa, a powerful advocate for corn country, said in a statement.

“It’s been a long process, but when the chips were down, President Trump delivered for farm families and biofuel producers,” said Emily Skor, CEO of the Growth Energy biofuel trade association.

The oil and refining industries criticized the plan.

“We are deeply concerned about the Administration’s decision to, once again, play politics with our fuel system by increasing an already onerous biofuel mandate, placing greater strain on the U.S. manufacturers he promised to protect and threatening higher costs for consumers,” the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers industry groups said in a joint statement.

Oil companies have consistently resisted measures to expand the biofuels market, which they view as a competitor. Refiners have vehemently complained that the requirements under the RFS cost them a fortune.

Trump waded into the issue early in his presidency after representatives of the refining industry complained about the high costs of compliance, seeking to tap into his administration’s support for rolling back regulation.

Trump’s EPA had since vastly expanded here its use of the provision allowing small refining facilities to seek waivers if they can prove compliance would cause them disproportionate financial hardship.

Reuters has reported here that small facilities owned by oil majors such as Exxon Mobil and Chevron Corp have been among the facilities securing recent exemptions.

Writing by Richard Valdmanis; Editing by Tom Brown, Steve Orlofsky and David Gregorio

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