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Biofuel Blending Mandates Expected As Soon As Next Week

The United States Environmental Protection Agency is preparing to send biofuel blending mandates to the White House for review as early as the first part of next week, sources told Reuters on Thursday.

The biofuel mandates will cover the three years up to and including 2022.

The EPA proposed reducing the amount of biofuels that oil refiners are required to add to petroleum fuels in order to give the refining industry a break after suffering demand destruction from the pandemic and high crude oil prices. Neither the oil industry nor the biofuels industry was happy with the proposed reduction—the biofuels industry for not turning against his campaign commitment to renewable fuels, and the oil industry for not cutting the mandates enough.

At the time, the EPA had proposed a reduction to 17.13 billion gallons for 2020, from 20.09 gallons set in 2019. For 2021, the EPA had proposed 18.52 billion gallons, and for 2022, the EPA proposed an increase, to 20.77 billion gallons.

It is not yet known whether next week’s proposal by the EPA will be the same as they proposed in December.

In January, however, sources suggested that President Biden was considering a cut to the 2022 biofuels blending mandates for ethanol. Oil refiners have argued that there isn’t enough ethanol to meet some of those requirements.

The oil and biofuels industry have a long history of disagreeing over the Renewable Fuel Standard program. But last year, the American Bakers Association joined the fight, arguing that corn is an essential agriculture commodity used in baking and asking for the mandates to either be lower or at least not increased.

The RFS program is facing even more scrutiny in the current high price oil and gasoline environment.

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By Julianne Geiger for Oilprice.com

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