The Trump administration has agreed to a new plan for boosting renewable fuels and offsetting waivers exempting oil refineries from mandates to use them, according to three people familiar with the matter who asked for anonymity before a formal announcement.
The tentative agreement, which follows weeks of negotiations, would allow the U.S. Environmental Protection Agency to offset those waivers in response to criticism from industry advocates and Midwestern politicians that the exemptions have hurt demand for corn-based ethanol and soybean-based biodiesel.
Under the deal, the EPA would factor recent waivers into new annual biofuel quotas, by adjusting the targets to reflect a three-year rolling average of exemptions. White House officials also rejected a bid by oil industry allies to prevent spikes in the prices of biofuel compliance credits refiners use to prove they have fulfilled the targets.
The agreement reflects a deal pitched by farm-state senators to the president last month.
The White House press office declined to comment on the matter. In an emailed statement, the EPA said it “will continue to consult with our federal partners on the best path forward to ensure stability.”
“The Trump administration has overseen year-over-year increases in domestic fuel ethanol production, to the highest level in history, and the United States exported a record volume of ethanol in 2018 for the second consecutive year,” the EPA said. “The president will always seek to engage with stakeholders to achieve wins for the agriculture and energy sectors.”
The deal could still unravel as administration officials work to translate broad commitments into formal regulations. There is a narrow window for the administration to codify the changes, as the EPA is legally required to finalize 2020 biofuel-blending quotas by Nov. 30.
Biofuel producers and supporters have warned the White House of potential political repercussions in Iowa and other politically important swing states. Iowa helped send Donald Trump to the White House in 2016, after he pledged to support ethanol.
Oil industry advocates have cautioned the administration that a lopsided deal could be just as risky, alienating some Rust Belt voters without fully satisfying biofuel interests.
“Politically, with the ethanol industry, too much is never enough,” said Scott Segal, a lobbyist with Bracewell who represents refiners. “The administration really has no assurance that agribusiness won’t demand more and more, just as they always have.”
The president and top administration officials have spent weeks trying to develop a plan for advancing biofuel and appeasing agricultural interests, without alienating oil companies. Both constituencies helped him win the election in 2016.
Trump tweeted Aug. 29 that “farmers are going to be so happy” about a “giant package” of biofuel policy changes, but then appeared to grow frustrated by resulting talks with senators from the Corn Belt and states with significant refining assets, at one point comparing the process to negotiations with the Taliban.