Trump faces dilemma as U.S. oil reels
from record biofuels targets
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[November 28, 2016]
By Chris Prentice
NEW YORK (Reuters) - The Obama
administration signed its final plan for renewable fuel use in the
United States last week, leaving an oil industry reeling from the most
aggressive biofuel targets yet as President-elect Donald Trump takes
over.
The Renewable Fuel Standard (RFS) program, signed into law by President
George W. Bush, is one of the country's most controversial energy
policies. It requires energy firms to blend ethanol and biodiesel into
gasoline and diesel.
The policy was designed to cut greenhouse gas emissions, reduce U.S.
reliance on oil imports and boost rural economies that provide the crops
for biofuels.
It has pitted two of Trump's support bases against each other: Big Oil
and Big Corn. The farming sector has lobbied hard for the maximum
biofuel volumes laid out in the law to be blended into gasoline motor
fuels, while the oil industry argues that the program creates additional
costs.
Balancing oil and farm interests is likely to prove a challenge for
Trump, who has promised to curtail regulations on the oil industry but
is already being reminded by biofuels advocates of the importance of the
program to the American Midwest, where he received strong support from
voters on Nov. 8.
Oil groups are renewing their calls to change or repeal the program
following Wednesday's announcement, when the Environmental Protection
Agency (EPA) set record mandates for renewable fuels - for the first
time hitting levels targeted by Congress nearly a decade ago..
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The EPA plan is "completely detached from market realities and confirms
once again that Congress must take immediate action to remedy this
broken program," said Chet Thompson, President of the American Fuel and
Petrochemical Manufacturers, in a statement.
It is unclear what Trump's plans for the program will be and his
transition team did not respond to Reuters' requests for comment.
Both camps are expecting an administration receptive to their demands,
though both have expressed concern and uncertainty over Trump's plans
for the program, according to experts, industry and political sources.
The installation of climate change skeptic Myron Ebell as head of the
transition at the EPA bolstered oil industry confidence Trump will swing
their way. In September, Trump appeared to briefly echo the views of his
supporter, billionaire Carl Icahn, who expressed concern about the
program.
Icahn, who owns a stake in an oil refiner, renewed those criticisms last
week, saying the ethanol credit market generated by the program is
susceptible to manipulation and harming independent refiners.
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![](../images/112816pics/news_r33.jpg)
President-elect Donald Trump gestures from the front door at the
main clubhouse at Trump National Golf Club in Bedminster, New
Jersey, U.S., November 20, 2016. REUTERS/Mike Segar
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PRO-ETHANOL CAMPAIGNING
The president-elect campaigned on a pro-ethanol platform when he
visited America's farm states and biofuels advocates expect he will
keep the RFS strong, maintaining annual targets at the minimum set
forth by Congress.
"Mr. Trump will not turn his back on the American heartland, we
believe in him," said Annette Sweeney, a former state representative
from Iowa who was a member of the Trump's agricultural advisory
committee during his candidacy.
"To a certain extent, we are on higher ground. You always want to be
on higher ground," said Bob Dinneen, head of the Renewable Fuels
Association, referring to the increase.
"We’ll be able to demonstrate the marketplace can absorb 15 billion
gallons of ethanol. We can put this all behind us. As we look to
2018... there's no reason to go back," he said.
The renewables industries have already started to emphasize their
place among American-made fuels, something experts expect will
appeal to Trump.
"There are a lot of good things to be said about second-generation
fuels, even from the new administration’s perspective," said Harvard
University professor and former Obama administration advisor James
Stock.
"All the new administration needs to do is embrace the original ...
vision of the RFS," he said.
(Editing by Simon Webb and Alistair Bell)
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