U.S. Oil and Biofuel Coalition Meets With EPA to Seek Biomass Diesel Boost

By Jarrett Renshaw and Stephanie Kelly

WASHINGTON, April 1 (Reuters) – A U.S. oil and biofuel coalition met with the Environmental Protection Agency on Tuesday to make the case for higher federal mandates for biomass diesel blending, according to three sources familiar with the plans.

The EPA meeting signals that the agency may be closer to releasing fresh biofuel blending quotas for the Renewable Fuel Standard (RFS), a first test of U.S. President Donald Trump’s promised support of the biofuel industry.

The proposal is expected to cover two years worth of mandates, two sources familiar with the matter told Reuters. The EPA could release the proposal as early as this month, sources said.

Big Oil and the Farm Belt’s biofuels makers are traditional competitors in the multibillion-dollar U.S. gasoline market, but have come together to form a consensus at the request of the White House in recent months in hopes of avoiding the type of clashes that defined the first Trump administration.

The coalition pushed for biomass diesel mandates of 5.5 billion to 5.75 billion gallons, according to a coalition document viewed by Reuters. That is up from its current level of 3.35 billion gallons, which the biofuel industry says is far below production capacity.

The coalition has settled on a corn-based ethanol blending mandate at 15 billion gallons, despite a push by some who wanted to see 15.25 billion gallons, according to two sources familiar with the discussions.

The EPA did not respond to requests for comment.

The coalition, led by the American Petroleum Institute (API), is showing some signs of splintering, however.

One group representing smaller independent oil refiners, the Fueling American Jobs Coalition, expressed opposition to a much higher biomass diesel mandate.

“Setting overly aggressive RFS mandates would threaten union jobs in places like Pennsylvania and Ohio. It would increase prices at the pump,” it said in a statement on Tuesday. “We hope EPA does not issue RFS mandates that undermine President Trump’s priorities of defeating inflation and protecting American manufacturing jobs.”

A group of truck stop operators and fuel retailers was also boycotting the meeting after a dispute over whether they could voice concerns about raising biomass diesel quotas without restoring a blenders tax credit that expired in December.

The splinter group says the blenders tax credit helped keep prices down for consumers, and its replacement – a producer tax credit known as 45Z- is incomplete and has been proven ineffective.

“This will not only hurt Americans’ financial standing, it will also create exceedingly difficult political challenges for the Agency and the White House,” the splinter group said in a letter to EPA administrator Lee Zeldin on Tuesday.

(Reporting by Jarrett Renshaw and Stephanie Kelly; Editing by Alexandra Hudson, Richard Chang and Marguerita Choy)