May 9, 2019 / 9:03 PM / 5 months ago

U.S. EPA proposes hike in biofuel mandate to 20.04 billion gallons in 2020: sources

WASHINGTON/NEW YORK (Reuters) - The U.S. Environmental Protection Agency has proposed increasing the volume of biofuels refiners must blend into their fuel annually to 20.04 billion gallons in 2020, from 19.92 billion gallons in 2019, according to two sources familiar with the matter.

FILE PHOTO: The U.S. Environmental Protection Agency (EPA) sign is seen on the podium at EPA headquarters in Washington, U.S., July 11, 2018. REUTERS/Ting Shen

The proposed mandate, now under review by other government agencies before being finalized, includes 15 billion gallons of conventional biofuels like ethanol, unchanged from 2019. It also includes 5.04 billion gallons of advanced biofuels, like those made from agricultural wastes, up from 4.92 billion in 2019, the sources said.

The EPA is charged with setting biofuel blending requirements for the refining industry as part of the Renewable Fuel Standard (RFS), a more than decade-old regulation that is aimed at helping farmers and reducing U.S. dependence on oil.

The policy has helped farmers by creating a huge market for ethanol and other biofuels, but oil refiners say compliance can cost a fortune.

EPA spokesman Michael Abboud confirmed the agency submitted a proposal for review, but did not comment on its contents.

“The proposal is currently under interagency review, which places the Trump administration on track to release the Renewable Fuel Standard Renewable Volume Obligations (RVOs) on time for the third consecutive year,” he said.

As part of the advanced biofuel proposal, the agency set mandates for cellulosic fuel at 540 million gallons and non-cellulosic at 4.5 billion, according to the sources.

It also proposed a biodiesel mandate of 2.43 billion gallons for 2021, unchanged from 2020, they said. The EPA sets biodiesel mandates a year in advance.

Small refineries can be exempted from biofuel blending if they prove that complying would cause them financial strain, and the Trump administration made extensive use of such exemptions in the last two years.

That has saved refiners money but angered the corn lobby, which argues the practice erodes biofuel demand.

Reporting by Humeyra Pamuk and Jarrett Renshaw; writing by Richard Valdmanis; editing by Alistair Bell and Phil Berlowitz

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