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Biden Administration Considers Biofuel Blending Cuts, According to Reports

Reuters writers Stephanie Kelly and Jarrett Renshaw reported this week that, “The administration of U.S. President Joe Biden is considering big cuts to the nation’s biofuel blending requirements, according to a document seen by Reuters, a move triggered by a broad decline in gasoline demand during the coronavirus pandemic.

If adopted, the proposal would be a win for the oil industry, most notably PBF Energy and CVR Energy, which argues biofuel blending is costly.

The cuts would anger ethanol producers such as Archer-Daniels-Midland Co and the nation’s corn farmers who produce the raw ingredients for ethanol – by far the most widely used biofuel.

The Reuters article stated that, “Biden’s Environmental Protection Agency, which administers the nation’s biofuel policy, would reduce blending mandates for 2020 and 2021 to about 17.1 billion gallons and 18.6 billion gallons, respectively, the document showed. That would be lower than a level of 20.1 billion gallons that had been finalized for 2020 before the coronavirus pandemic.

“The agency also would set the level for 2022 at about 20.8 billion gallons, the document showed.

“The EPA is setting the 2020 and 2021 mandates retroactively.”

Kelly and Renshaw added that, “Ethanol would take the biggest hit. Levels for 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.

McConnell, Michael, Olga Liefert, and Angelica Williams, Feed Outlook, FDS-21h, U.S. Department of Agriculture, Economic Research Service, August 16, 2021.

“The EPA did not comment for this story, but administration officials cautioned that the numbers are not final and still subject to revisions before clearing an interagency review process. The agency sent a proposal to the Office of Management and Budget to start the review process in August.”

Also this week, Bloomberg writers Jennifer A. Dlouhy and Kim Chipman reported that, “The Biden administration is preparing to propose cutting biofuel quotas for 2020 and 2021, amid pressure from refining interests and their Democratic allies in Congress, according to several people familiar with the matter.”

The Bloomberg article stated that, “The EPA’s approach represents a bid by the administration to balance competing demands from Democratic allies and industry. Lawmakers from the U.S. Midwest have pressed for more bullish targets and politicians from the U.S. Northeast have argued reductions are essential to make up for the pandemic-spurred drop in fuel demand and compensate for 2020 targets they say exceeded blending capacity.”

And the Bloomberg article added that, “A document showing the potential number of compliance credits that would be needed to fulfill the targets was widely circulating in Washington this week, as stakeholders clamored for more information about the quotas that could be finalized later this year. The Renewable Fuels Association on Wednesday warned against relying on an email purportedly showing numbers the trade group distributed to members. Instead, the numbers are ‘fake’ and the message is a complete fabrication, the group said.”

DTN Ag Policy Editor Chris Clayton reported this week that, “Prices for ethanol Renewable Identification Numbers (RIN), corn and bean oil fell Wednesday morning after multiple energy pricing services released proposed ethanol blend volume numbers for 2020 through 2022 that a lead biofuels trade association claims are a ‘spoofing’ attempt. The ‘spoof’ comes as the ethanol industry expects the Environmental Protection Agency to release renewable volume obligations (RVOs) for the years 2020-22. Industry observers have speculated the RVO numbers could come from the agency on Friday.

“The Renewable Fuels Association sent out an email midmorning Wednesday stating that the group had been made aware that some reporters were receiving an email showing ‘fake 2020-2022 RVO numbers that were supposedly shared by RFA with its members.’

“RFA wrote: ‘We want you to know this is a complete fabrication and a shameful ‘spoofing’ attempt. We are trying to get to the bottom of who is sending this and why. RFA never sent out any such email or circulated any potential RVO numbers to our member companies.'”

Keith Good Photo

Keith Good is the Farm Policy News editor for the farmdoc project. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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