Higher biofuel target irks U.S. refiners

(Reuters) — The United States Environmental Protection Agency has announced that it will require fuel companies to blend slightly more biofuels into the nation’s gasoline and diesel next year, angering oil refiners who view them as a competitive threat.

The announcement follows weeks of lobbying by Midwestern lawmakers and representatives of the corn industry who wanted the agency to reject recent proposals from the oil industry to water down the U.S. biofuels mandates.

“Maintaining the renewable fuel standard at current levels ensures stability in the marketplace and follows through with my commitment to … upholding the rule of law,” EPA Administrator Scott Pruitt said in a news release.

The U.S. Renewable Fuels Standard requires refiners to blend increasing amounts of biofuels into the nation’s fuel supply every year as a way to boost U.S. agriculture, slash energy imports and cut emissions.

The law, introduced more than a decade ago by then-President George W. Bush, has been a boon to the corn belt but has upset the oil industry, which sees biofuels as competition and which has been burdened with the costly responsibility of blending.

The 2018 targets require fuel companies to blend 73.02 billion litres of renewable fuels into the nation’s fuel supply, up slightly from the 72.98 billion litres required for 2017.

That will include 57 billion litres of conventional biofuels like corn-based ethanol, in line with 2017, and 16.24 billion litres of so-called advanced biofuels, up from 16.20 billion in 2017, the EPA said.

Advanced or second-generation biofuels are made from lignocellulosic biomass or woody crops, agricultural residues or waste.

For 2019, the EPA set a target for biodiesel at 7.95 billion litres, unchanged from 2018.

The targets adhere to the EPA’s proposal made in July for conventional biofuels and biodiesel, but reverses a proposal by the agency to slightly reduce total advanced volumes to 16.05 billion litres in 2018.

After consultations with the oil industry, the EPA had opened the door to cuts to the biofuels volumes targets and was considering other ideas to ease the burden on refiners but eventually backed off under heavy pressure from Midwestern lawmakers.

Chet Thompson, president of American Fuel & Petrochemical Manufacturers, which represents U.S. refining companies, said the EPA’s final decision showed it was “bowing the knee to King Corn.”

“We think this action is bad for U.S. manufacturing and American consumers,” he said.

A number of groups representing ethanol growers praised the targets, including the Renewable Fuels Association.

But not everyone representing the biofuels industry was happy. U.S. Senator Chuck Grassley of Iowa, a vocal supporter of the biofuels industry, said he would have liked to see an increase in bio-diesel levels in 2019.

“The EPA’s announced renewable volume obligations fall short of the full potential of the U.S. biofuels industry,” he said.

Doug Whitehead, chief operating officer of the National Bio-diesel Board, echoed the sentiment.

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