News
27/03/25
Oil, biofuel groups meet to align on RFS policy
New York, 27 March (Argus) — Energy and farm groups met last week at the
American Petroleum Institute to negotiate a joint request for President Donald
Trump's administration as it develops new biofuel blend mandates, according to
five people familiar with the matter. The private meeting involved groups from
across the supply chain, including representatives of feedstock suppliers,
biofuel producers, fuel marketers, and oil refiners with Renewable Fuel Standard
(RFS) obligations. The groups coordinated earlier this year around a letter to
the Trump administration on the need to update the RFS and are now seeking
agreement on other program elements. According to the people familiar with the
matter, the groups agree on pushing the Environmental Protection Agency (EPA) to
set higher blend mandates under the program's D4 biomass-based diesel and D5
advanced biofuel categories. Groups support slightly different volume targets
that are nevertheless all in "a rounding number of each other" in the D4
category, according to one lobbyist. But there is still disagreement about
whether to ramp up mandates quickly in 2026 or provide a longer runway to higher
volumes. Clean Fuels Alliance America and farm groups have publicly supported a
biomass-based diesel mandate of at least 5.25bn USG starting next year, which
could justify a broader advanced biofuel mandate above 9bn USG, according to the
people familiar, though others worry about fuel cost impacts if mandates spike
so quickly. The current mandate for 2025 is 7.33bn USG in the advanced biofuels
category, including a 3.35bn USG mandate for the biomass-based diesel
subcategory, so the volumes being pushed for future years would be a steep
increase. The RFS, highly influential for fuel and commodity crop prices,
requires oil refiners and importers to blend annual amounts of biofuels into the
conventional fuel supply or buy Renewable Identification Number (RIN) credits
from those who do. The idea behind the groups' coordination is that the Trump
administration might more quickly finalize RFS updates if lobbyists with a
history of sparring over biofuel policy can articulate a shared vision of the
program's future. One person familiar said the effort comes after the Trump
administration directed industry to align biofuel policy goals, though others
said they understood the coordination as largely voluntary. EPA did not provide
comment. There is less agreement around the program's D6 conventional biofuel
category, which is mostly met by corn ethanol. Oil groups have in the past
criticized EPA for setting the implied D6 mandate at 15bn USG, above the amount
of ethanol that can feasibly be blended into gasoline, though excess biofuels
from lower-carbon categories can be used to meet conventional obligations.
Ethanol interests support setting the D6 mandate even higher than 15bn USG,
which could be a tough sell. The discussions to date have not involved targets
for D3 cellulosic biofuels, a relatively small part of the program. A proposal
to lower 2024 volumes has hurt D3 credit prices, signaling that future mandates
are effectively optional, according to frustrated biogas executives , and has
reduced the salience of the issue for other groups. A proposal from President
Joe Biden's administration to create a new category called "eRINs" to credit
biogas used to power electric vehicles has similarly not come up. "We're not
expecting to see any attempt to include eRINs in this next [RFS] proposal,"
Renewable Fuels Association president Geoff Cooper told Argus earlier this
month. The meeting last week was largely oriented around the RFS, though a
National Association of Truck Stop Operators representative raised the issue of
tax policy too. The group has been frustrated by the expiration of a
long-running blenders credit and the introduction this year of a less generous
credit for refiners, which is only partially implemented and has spurred a sharp
decline in biomass-based diesel production. But others involved in negotiations,
while they acknowledge tax uncertainty could hurt their case for strong
mandates, are trying to avoid contentious topics and focus mostly on volumes.
Republican lawmakers are separately weighing whether to keep, repeal, or adjust
that credit to help out fuel from domestic crops, and there is no telling how
long that debate might take to resolve. Another thorny issue discussed at the
meeting is RFS exemptions for small refineries. Biofuel producers strongly
oppose such waivers and say that exempted volumes should at least be reallocated
among facilities that still have obligations. Oil groups have their own views,
though it is unclear how involved the American Fuel and Petrochemical
Manufacturers — which represents some small refiners and has generally been more
critical of the RFS than the American Petroleum Institute — are in discussions.
EPA is aiming to finalize new volume mandates by the end of this year , people
familiar with the administration's thinking have said, though timing for a
proposal is still unclear. Future conversations among energy and farm groups to
solidify points of unity — and strategize around how to downplay disagreements —
are likely, lobbyists said. RIN prices rally Speculation over the trajectory of
the RFS, and the potential for higher future volumes, supported soybean oil
futures and widened the bean oil-heating oil (BOHO) spread. The BOHO spread
maintains a positive correlation with D4 RIN prices as a widening value raises
demand for D4 credits as biofuel producers look to offset higher production
costs. Thursday's session ended with current-year ethanol D6 credits valued
between 79¢/RIN and 82¢/RIN, while their D4 counterparts held at a premium and
closed with a range of 84¢/RIN to 89¢/RIN. These gains each measured more than
5.5pc growth relative to Wednesday's values. By Cole Martin and Matthew Cope
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