Washington — The American Petroleum Institute said Tuesday it is "deeply concerned" by changes to the US biofuel mandate under consideration by the White House, including raising 2020 ethanol and 2021 biodiesel volumes, limiting small-refinery waivers and promoting E85 use.
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"It would represent a significant departure from the balanced approach the administration has applied to ethanol policy thus far," said Frank Macchiarola, API's vice president of downstream and industry operations.
"This rushed and arbitrary course deviation will only further distort the fuel market while providing little, if any, relief to farmers," Macchiarola told reporters during a briefing. "We hope the administration walks back from the brink of what would be a disastrous political decision that potentially hurts American drivers."
US President Donald Trump said last week his administration was working on a "giant package" that would benefit the biofuel industry, in response to anger building from farm states about the Environmental Protection Agency exempting small refiners from the biofuel mandate.
"The Farmers are going to be so happy when they see what we are doing for Ethanol, not even including the E-15, year around, which is already done," Trump said, referring to his lifting the ban on summertime sales of gasoline blended with 15% ethanol.
The latest battle between biofuel makers and oil refiners flared up August 9, when EPA issued 31 waivers exempting smaller refineries from the Renewable Fuel Standard.
Biofuel makers argue the waivers have gutted demand and led to a wave of ethanol plant closures, while oil refiners argue they have not hurt ethanol production, sales, or demand.
Ethanol RINs have recovered about half of the price drop seen after the latest refinery waivers.
S&P Global Platts Friday assessed D6 ethanol RINs for 2019 compliance at 15.25 cents/RIN and 2018 credits at 7.75 cents/RIN. On August 9, D6 RINs were at 19.75 cents/RIN for 2019 and 15.5 cents/RIN for 2018.
RINs are tradable credits EPA issues to track production and use of alternative transportation fuels. For corn-based ethanol, one gallon of ethanol yields one RIN.
EPA has until the end of November to issue its final 2020-21 RFS volumes, but biofuel industry sources said the Trump administration would need to take action in the coming weeks to prevent more ethanol plant closures.
In July, EPA proposed a 2020 biofuel mandate of 20.04 billion gallons, up less than 1% from this year. Renewable fuel would make up 10.92% of US transportation fuel supply next year before any refinery waivers, if volumes are approved as proposed.
The conventional ethanol mandate would remain at 15 billion gallons. The biofuel industry had hoped for a 2020 conventional ethanol mandate of 15.5 billion gallons, after an appeals court ruled in 2017 that EPA had improperly waived 500 million gallons in the 2016 mandate.
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