US oil group opposes Trump's plan to reduce biofuel import credit

The top U.S. trade group for oil on Thursday added its voice to the chorus of protests against a government proposal that would reduce incentives for biofuels imports. This will test the Trump administration’s resolve to maintain the policy over the next few months.

As a result of the mounting criticism, the White House is forced to choose between farmers who want to prioritize domestic supplies or refiners who are looking for cheaper feedstock. Both groups are loyal to Donald Trump.

The proposal, made by the Environmental Protection Agency (EPA) in June, would only allocate half as many renewable fuel credits for imported biofuels or biofuel feedstocks than domestic biofuels.

The change, which may be finalized by the end of the year, will have significant implications for biobased diesel that relies on imported fuel to meet federal requirements.

The U.S. Renewable Fuel Standard requires refiners either to blend billions gallons biofuels in the fuel market or to buy credits, known as RINs, from those who do so to demonstrate compliance with this program.

Farmers in the Farm Belt, and specifically soybean growers, have hailed this proposed change as a win. They claim that the RFS has always been intended to boost the domestic production, while countries such as China are flooding the market with cheap supplies.

The oil industry claims that the U.S. does not have enough feedstocks to meet federal quotas. This would further tighten an already stretched market, and drive prices up.

The American Petroleum Institute wrote to the EPA in a letter on Thursday, urging them to remove the import proposal.

API also questioned legality in separate comments, seen by. This suggests that the well-funded trade group may be willing to take the administration to court.

Both refiners and farmers were united earlier this year on the issue of bio-based fuel. They both agreed that federal quotas should be increased. The shift in imports, however, caught both industries off guard.

Even among trade groups, there is a divided opinion on the proposed imports.

Clean Fuels Alliance America (a biodiesel organization) said that there was no consensus among its members regarding the proposal to lower the RIN values for fuels made domestically using foreign feedstock. (Reporting and editing by Jan Harvey; Jarrett Renshaw, Stephanie Kelly)

(source: Reuters)