Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Trump administration sees partial waivers as potential fix in biofuel debate: sources

Published 12/06/2019, 07:14 PM
Updated 12/06/2019, 07:14 PM
© Reuters. U.S. President Trump hosts luncheon with UN Security Council representatives at the White House in Washington

© Reuters. U.S. President Trump hosts luncheon with UN Security Council representatives at the White House in Washington

By Stephanie Kelly and Jarrett Renshaw

NEW YORK (Reuters) - The Trump administration believes it can assuage farmer anger over its biofuels policy by agreeing to use more partial waivers for oil refineries, signaling a potential solution to a protracted battle between Big Corn and Big Oil, two key political constituencies in next year's presidential election, according to three sources familiar with the matter.

The administration has spent months trying to appease farmers and corn-based biofuel producers after it granted 31 oil refiners exemptions to blending mandates in August, sparking outrage across the Farm Belt. It unveiled a proposal to address the issue in October that biofuel companies say does not go far enough to compensate for the ethanol demand destruction caused by the waivers.

President Donald Trump has endorsed the use of partial exemptions as a solution to the issue going forward, one of the sources said, instead of consistently issuing waivers that free refiners from 100% of their biofuel blending obligations. It is unclear if the support for the use of partial exemptions would be made official through rule making.

The U.S. Environmental Protection Agency has delivered its proposal for 2020 blending requirements to the White House Office of Management and Budget, an EPA official said on Friday. That proposal is "similar" to the plan the agency unveiled in October, the official said.

But it is possible that changes could be made before the proposal becomes final. The proposal now must go through an interagency review process, where tweaks could be made.

Under the U.S. Renewable Fuel Standard, refineries are required to blend 15 billion gallons of ethanol annually. But the EPA can exempt small facilities that demonstrate compliance would hurt them financially.

The EPA has roughly quadrupled the number of waivers it grants to oil refineries since Trump became president, something the EPA says is meant to protect blue-collar refinery jobs but which biofuels producers say is killing ethanol demand.

EPA's current plan for 2020 would address the increased number of exemptions by raising the amount some refineries must blend next year, based on a three-year average of the volumes that the Department of Energy had advised the EPA to waive under the exemption program.

The corn lobby has criticized the plan, however, saying that it lacks certainty that the EPA will adequately make up for the exemptions going forward. The group argues that it should instead account for actual amounts waived by the agency since the EPA in recent years has been waiving higher volumes than the DOE advised.

The EPA declined to comment further on partial exemptions.

On Thursday, EPA chief Andrew Wheeler told a biofuels company that the agency is working to address industry concerns, according to a source familiar with the matter.

Wheeler acknowledged in the call that the industry wants greater certainty on blending requirements and said the agency was working to address the issue, the source said.

Wheeler said in discussions with other biofuels companies on Thursday that if the DOE recommends a partial exemption, the EPA will follow that guidance, another source said.

Any effort to change the current 2020 blending proposal to help the biofuel industry is likely to upset refiners, who say RFS requirements are costly and unfair.

© Reuters. U.S. President Trump hosts luncheon with UN Security Council representatives at the White House in Washington

The discussions reflect the difficulties Trump has faced seeking to please both the oil and corn industries, whose support he is relying on in next year's election.

Latest comments

Trump is 0-3 with farmers, reducing the amount of corn used in biofuel production, tariffs which has dried up the export of farm good to China and immigration cut which cause farmers to loose access to cheap labor to work in the fields. Trump will loose the farm vote and the 2020 election.
nope. new study shows $26B subsidy is more than what US farmers would have made if China were buying before trade war. farmers get more money without working isn't going to stop voting for trump. lol
Alcohol doesnt blend well w gas. Ethernol is lower in energy. It is greener but u have to burn more, so it is net neutral.
Clean the swamp!
it's drain the swamp actualy, in case lol
Corn industry as bio fuel lobby should be illegal. ITS THE SWAMP!
good
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.