The Trump Administration is set to announce later on Friday a plan to boost ethanol and biodiesel demand and placate the farming lobby angered by the Administration’s waivers for dozens of oil refineries exempted from blending corn-based ethanol in fuels, Reuters reports, quoting four sources with knowledge of the matter.

Under the Renewable Fuel Standard (RFS), oil refiners are required to blend growing amounts of renewable fuels into gasoline and diesel. The Midwest farm belt benefits from the policy, but the oil refiners do not—they lose petroleum-based market share of fuels and meeting the blending requirements costs them hundreds of millions of dollars.

The U.S. biofuels policy has been pitting the oil refining industry against the Midwest farm lobby.

While U.S. President Donald Trump is a vocal supporter of the U.S. oil industry, he also supports the RFS, especially corn-based ethanol, which protects farming jobs in the politically important states with large Republican majorities in the Midwest.

President Trump angered earlier this year the powerful corn lobby in the Midwest, after the Environmental Protection Agency (EPA) waived obligations for 31 oil refineries to blend ethanol in the fuels they make.

Now the new plan for biofuels, the result of weeks of negotiations, could anger the oil industry, because none of the oil lobby’s wishes such as putting a ceiling on the biofuel blending credits is included in the new measures, according to the sources who spoke to Reuters.

The plan designed to boost the farming industry is said to be making up for the waivers to refiners by raising the ethanol blending requirements in the future and by expanding the market for high-ethanol blends such as E15, Reuters’ sources say.

The Trump Administration has been planning the ethanol-boosting policies for weeks, and President Trump has been said that he would soon unveil his plan, a kind of ‘apology package’ for the farmers after upending the ethanol market with the recent decision favoring the oil industry.

 

By Mohsen Shahvar