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Trump administration promises biofuel boost to hard-hit farmers

Credit: REUTERS/KEVIN LAMARQUE

The Trump administration on Friday unveiled a plan to boost U.S. biofuels consumption starting next year to help struggling farmers, a move that cheered the agriculture industry but was likely to trigger a backlash from Big Oil.

By Humeyra Pamuk and Stephanie Kelly

WASHINGTON/NEW YORK, Oct 4 (Reuters) - The Trump administration on Friday unveiled a plan to boost U.S. biofuels consumption starting next year to help struggling farmers, a move that cheered the agriculture industry but was likely to trigger a backlash from Big Oil.

The plan would require a yet unspecified increase in the amount of ethanol that oil refiners must add to their fuel in 2020, and would also aim to remove further barriers to the sale of higher ethanol blends ofgasoline like E15, the Environmental Protection Agency said in a statement.

“Today’s agreement is the latest in a series of steps we have taken to expand domestic energy production and improve the Renewable Fuel Standard program that will result in sustained biofuel production to help American farmers," EPA Administrator Andrew Wheeler said.

The rules, which will be finalized after a period of public comment, would "ensure that more than 15 billion gallons of conventional ethanol be blended into the nation’s fuel supply beginning in 2020," the EPA said. It did not give an exact number.Any changes to blending volumes mandates for 2020 must be finalized by Nov. 30.

Before Friday's proposal, the EPA had called for the refining industry to add 20.04 billion gallons of biofuels, including 15 billion gallons of ethanol, into their fuel in 2020.

The Trump administration had already provided a boost to E15 earlier this year, by lifting Obama-era seasonal restrictions that had banned its sale during summer months.

President Donald Trump in August had promised farmers a “giant package” related to ethanol after his administration angered the powerful corn lobby by exempting 31 oil refineries from their obligations under the RFS, freeing them from a requirement to blend corn-based ethanol into their fuel or buy credits from those who do.

Biofuel companies, farmers and Midwest lawmakers had slammed Trump’s EPA for the waivers, arguing they undercut demand for corn already slumping due to the U.S. trade war with China.

“The president listened to all points of view and delivered. Small refineries can still apply for waivers while biofuels are able to blend the legally-required amount," Republican Senator Chuck Grassley of Iowa, a powerful advocate for corn country, said in a statement.

"It’s been a long process, but when the chips were down, President Trump delivered for farm families and biofuel producers," said Emily Skor, CEO of the Growth Energy biofuel trade association.

The plan came after weeks of meetings between White House officials and oil and biofuel industry representatives. It didnot include the oil refining sector’s top wish: a cap on the price of biofuel blending credits.

The oil and refining industries have resisted measures to expand the biofuels market, which it views as a competitor, and has vehemently complained that the requirements under the RFS cost them a fortune.

Officials for the American Fuel and Petrochemical Manufacturers and American Petroleum Institute lobby groups did not immediately respond to requests for comment.

The oil and corn industries have long clashed over the RFS. The regulation has helped corn farmers by creating a 15 billion-gallon per year market for ethanol but has irked refining companies that say complying can cost them hundreds of millions of dollars.

Trump waded into the issue early in his presidency after representatives of the refining industry complained about the high costs of compliance, seeking to tap into his administration’s support for rolling back regulation.

Trump’s EPA has since vastly expanded its use of a provision of the RFS allowing small refining facilities to seek waivers if they can prove compliance would cause them disproportionate financial hardship.

Reuters has reported that small facilities owned by giants like Exxon Mobil XOM.N and Chevron Corp CVX.N have been among the facilities securing recent exemptions.

(Writing by Richard Valdmanis; Editing by Tom Brown, Steve Orlofsky and David Gregorio)

((richard.valdmanis@thomsonreuters.com; +1 617 312 6022; Reuters Messaging: richard.valdmanis.thomsonreuters.com@reuters.net))

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