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White House sets biofuel mandate meeting: sources

23 Feb 2018, 10.46 pm GMT

White House sets biofuel mandate meeting: sources

Houston, 23 February (Argus) — US President Donald Trump planned to meet next week with executive and legislative leaders to discuss changing federal biofuel mandates, according to sources familiar with the meeting.

The meeting, which was to include Environmental Protection Agency (EPA) administrator Scott Pruitt and US Department of Agriculture secretary Sonny Perdue, would discuss changes to reduce costs to refiners under the Renewable Fuel Standard (RFS) as one refiner in politically important Pennsylvania seeks bankruptcy protection, according to the sources. A similar meeting in December did not result in any immediate change.

But the discussion, amid major domestic and international political issues for the Trump administration, showed the level of interest in changing the program, a refining industry source said.

"The fact that this issue is actually getting in front of the president twice within the span of a couple of months now, I think, shows that there is significant movement to try and address something," according to the source.

EPA and USDA did not respond to requests for comment. Senators also said to participate in the meeting, including Sens. Ted Cruz (R-Texas), Chuck Grassley (R-Iowa) and Joni Ernst (R-Iowa), did not respond to requests for comment. A White House spokeswoman had no immediate comment on meeting plans.

Meetings were scheduled for today and 26 February in advance of a planned 27 February White House meeting, according to sources familiar with but not authorized to discuss the sessions on the record.

Prices for ethanol renewable identification numbers (RINs) used to prove compliance fell by the largest day-to-day amount since late September following initial reports of the meeting, to 61¢/RIN.

RFS requires refiners, importers and other companies ensure each year that renewables blend into the fuels they add to the US transportation supply. Companies that lack blending facilities to add the fuel directly must purchase RINs representing that activity from blenders.

Merchant refiners that lack this blending capacity have for years sought to change or eliminate the program. Renewable fuels and agricultural groups have defended the mandates as forcing changes to the fuel supply conventional fuel businesses would have otherwise resisted.

Details on the focus of the meeting varied. Two sources said that attendees would discuss proposals capping the price of RINs and making it easier to sell higher-ethanol gasoline blendstocks, ideas Cruz has floated but not defined. One source added that discussions included allowing ethanol exports to generate RINs, a concept EPA sought comment on last fall before dropping under political pressure less than a month later.

Each concept would to reduce prices for RINs by capping costs or by increasing the supply of credits. Each would also have to fall under relief that could be offered by EPA or other administrative actions, rather than an act of Congress.

The proposed meeting follows a Cruz rally at Philadelphia Energy Solutions (PES) 330,000 b/d refinery in Philadelphia, Pennsylvania. PES blamed the mandates for threatening hundreds of its full-time and contracted jobs in its bankruptcy filing last month. The refinery faced closure in 2012 for years of poor returns unrelated to the program, and has seen rising feedstock costs and competition in the fuel marketplace.

The meeting also arrives as a two-year effort organized by Sen John Cornyn, (R-Texas), was believed close to producing legislation proposing changes to the program with support from refining and renewable fuel industry stakeholders.

Cornyn's office did not comment on the meeting or whether it would affect legislative plans.

"Our perspective is, really, any long-term, meaningful reform has to go through Congress," a source familiar with that effort said.


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