Oil and Gas

Trump administration set to announce new plan to boost ethanol -sources

WASHINGTON/NEW YORK, Oct 4 (Reuters) - The Trump administration is expected on Friday to unveil a new plan to boost U.S. biofuels demand as it seeks the support of farmers in next year’s election, four sources briefed on the matter told Reuters, a move likely to trigger a backlash from the oil industry.

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

The plan here, devised after weeks of meetings between White House officials and industry representatives, would make up for those waivers by increasing the amount of ethanol refiners must use in the future, and by further expanding the retail market for higher ethanol blends of gasoline like E15.

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

The new plan is not expected to include anything from the oil industry’s wish-list, however, like a cap on the price of biofuel blending credits, the sources said, meaning it could prove a bitter-pill for refiners.

The rival oil and corn industries have long clashed over America’s biofuels regulation, the Renewable Fuel Standard. 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 a fortune.

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 Environmental Protection Agency has since vastly expanded here 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 here that small facilities owned by giants like Exxon Mobil and Chevron Corp have been among the facilities securing recent exemptions.

Biofuel companies, farmers and Midwest lawmakers have all slammed Trump’s EPA for the waivers, arguing they undercut demand for corn at a time growers are already hurting from lost markets due to the U.S. trade war with China. (Writing by Richard Valdmanis; Editing by Tom Brown)