Biden’s EXCLUSIVE administration plans big cuts in biofuel mandates to win oil industry – document
NEW YORK, Sept. 22 (Reuters) – US President Joe Biden’s administration plans to drastically reduce national biofuel blending requirements, according to a document viewed by Reuters, a move triggered by a large drop in demand for gasoline during the coronavirus pandemic.
If passed, the proposal would be a victory for the oil industry, including PBF Energy (PBF.N) and CVR Energy (CVI.N), who argue that blending biofuels is expensive.
The cuts would anger ethanol producers such as Archer-Daniels-Midland Co (ADM.N) and the country’s corn growers who produce the raw ingredients for ethanol – by far the most widely used biofuel.
After Reuters broke the news, the credits used to prove compliance with the requirements, known as RINs, fell to $ 1 each, from $ 1.07 in the previous session, traders said.
The Biden Environmental Protection Agency, which administers the national biofuels policy, would reduce blending mandates for 2020 and 2021 to about 17.1 billion gallons and 18.6 billion gallons, respectively, according to the document. That would be lower than the 20.1 billion gallon level that was finalized for 2020 before the coronavirus pandemic.
The agency would also set the level for 2022 at around 20.8 billion gallons, according to the document.
The EPA retroactively sets the 2020 and 2021 terms.
Ethanol would be the most affected. Levels of conventional renewable fuel, which includes ethanol, would drop from 15 billion gallons to about 12.5 billion gallons in 2020, 13.5 billion gallons in 2021 and 14.1 billion gallons in 2022, according to the document.
The EPA has not commented on this story, but administration officials have cautioned that the numbers are not final and are still subject to revisions before authorizing an interagency review process. The agency sent a proposal to the Bureau of Management and Budget to initiate the review process in August.
Under the US Renewable Fuels Standard, petroleum refiners must blend biofuels into the country’s fuel blend or purchase tradable credits, called RINs, from those who do.
The policy aims to help the country’s farmers while reducing the need for US oil imports.
But politics has been a political lightning rod for years. The agricultural lobby strongly supports it because it has helped to boost the corn market. But oil refiners say the warrants are too expensive and threaten to bankrupt refineries and their workers.
The coronavirus pandemic has added more complexity to the battle between industries over mandates, decimating demand for fuel and hurting both oil refiners and biofuel producers.
Meanwhile, RINS prices have skyrocketed this year, and refinery advocates have indicated these prices are a reason to relieve the industry of some demands.
RINs hit an all-time high of $ 2 each in May of this year, but speculation over future needs has driven prices down over the past month.
Reporting by Stephanie Kelly and Jarrett Renshaw; Editing by Richard Valdmanis and Lisa Shumaker
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