White House expected to announce compromise on biofuels: sources

[June 04, 2018]  By David Shepardson

WASHINGTON (Reuters) - The Trump administration is expected on Monday to announce changes in biofuels policies, including a plan to count ethanol exports toward federal biofuels usage quotas and allowing year-round sale of fuels with a higher blend of ethanol, two sources briefed on the matter said.

Reuters reported on May 11 that after hosting several meetings between representatives of the corn and refining industries, the administration was in the "last stages" of formally proposing changes to biofuels regulations intended to appease both sides.

The changes, expected to be outlined in a memorandum on Monday, will be subject to the federal rule-making process, added the sources, who were not authorized to speak publicly. A White House spokeswoman declined to comment.

The changes are aimed at easing tensions between the oil and corn industries, which have been clashing for months over the future of the U.S. Renewable Fuel Standard - a law that requires refiners to add increasing amounts of biofuels into the nation’s gasoline and diesel.

While the RFS has helped farmers by creating a 15 billion-gallon-a-year market for corn-based ethanol, oil refiners have increasingly complained that complying with the law incurs steep costs and threatens the very blue-collar jobs President Donald Trump has promised to protect.

The administration is expected to announce that it plans to allow exports of biofuels like ethanol to count toward the annual biofuels volume mandates under the RFS - which could ease the burden on domestic refiners by reducing the amounts they would have to blend domestically.

President Donald Trump talks with the media as U.S. Secretary of State Mike Pompeo looks on after a meeting with North Korea's envoy Kim Yong Chol at the White House in Washington, U.S., June 1, 2018. REUTERS/Leah Millis

The Trump administration is expected to propose lifting restrictions on selling a certain kind of higher-ethanol blend gasoline in the summer, called E15. Trump has already stated his support for such a move, which has been long sought by the corn lobby because it would theoretically expand the market for biofuels.

Sales of E15 are currently banned in the summer over worries it could increase smog.

Bloomberg News reported earlier on the timing of the announcement expected for Monday.

Senator Charles Grassley, an Iowa Republican and biofuels advocate, said in a statement on Sunday that allowing exports of biofuels to count toward mandates "exposes the U.S. to trade cases and retaliation from countries like Canada and others."

He added that allowing the sale of E15 "isn't anywhere near enough to offset the impact" of the ethanol export credits. "I’m not convinced this is a win-win."

(Reporting by David Shepardson; Additional reporting by Jarrett Renshaw; Editing by Peter Cooney)

[© 2018 Thomson Reuters. All rights reserved.]

Copyright 2018 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.