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Biden plans biofuel cut that could ease pressure on oil refiners

Stuart Westmorland / iStock / Getty Images Plus oil-refinery-sunrise-GettyImages-476274585.jpg
The biofuel quota reductions would be blow to biofuel producers.

By Jennifer A. Dlouhy and Kim Chipman

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 Environmental Protection Agency also is on track to propose a modest increase in the amount of plant-based fuels that must be mixed into gasoline and diesel in 2022, under a draft plan now being reviewed by the White House Office of Management and Budget. 

Under that draft proposal, the overall renewable fuel requirement for 2020 -- previously set at 20.09 billion gallons -- would be reduced by as much as 15%, said the people, who asked for anonymity before the measure is announced. The proposed target for 2021 would also drop under the draft, though a modest increase is planned for 2022. 

The 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. 

Spokespeople for the EPA did not comment on the plan, which was reported earlier by Reuters.

The quotas are closely watched because of their importance in bolstering demand for corn-based ethanol and soy-based biodiesel. Under federal law, refiners and fuel importers are required to satisfy the annual targets dictated by the EPA and prove their compliance using tradable credits known as renewable identification numbers.

A document showing the potential number of those 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 some “fake” numbers falsely attributed as an email from the trade group.

The planned reductions would be blow to biofuel producers, who had hoped President Joe Biden’s campaign pledges to support the federal renewable fuel program would translate into more aggressive quotas and an end to waivers exempting some refineries from the mandates.

Emily Skor, chief executive officer of ethanol lobby group Growth Energy, said if reported figures are accurate, they would amount to a “back pedaling” on Biden’s promise. “It’s hard to imagine any justification for the administration to make such a move,” Skor said.

© 2021 Bloomberg L.P.
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