Sources say that the US will finalize biofuel quotas for 2026 by early March and drop import penalties.
According to two sources familiar with the plans, the administration of 'President Donald Trump' plans to finalize biofuel blending quotes for 2026 by early March. They will keep them close to their initial proposal, while dropping plans to penalize imported renewable fuels and feedstocks.
The plan, if finalized, would represent a partial compromise among rival oil and agricultural industry groups. It would preserve the increased blending goals sought by biofuel producers and drop a proposal which U.S. refining companies had warned could disrupt fuel markets and increase costs.
U.S. Environmental Protection Agency (EPA), which oversees U.S. Biofuel Policy, told industry stakeholders that it intends to send its final proposal to White House Budget Office for review by the end of this month. The finalization is expected approximately 30 days after White House interviews with industry. The EPA proposed in June that total biofuel blending volume would be 24.02 billion gallons - in 2026, and 24.46 - in 2027. This is up from 22.33 gallons a year ago. The total included an aim of 5.61 billion gallon for bio-based diesel, which is a big jump from 3.35 billion gallons by 2025.
Sources told? that the EPA was now looking at a range between 5.2 and 5.6 billion gallons of bio-based fuel in 2026.
The potential adjustment downward is partly related to the EPA’s plan to abandon a proposal which would slash value of renewable 'fuel credits' given by the U.S. Government?for imported?biofuels. This "America First" strategy was hailed by the soybeans and biodiesel industry as a win.
Big Oil, led the influential American Petroleum Institute, argued that limiting credit for foreign supply would constrain availability and drive fuel prices higher. The White House wants to avoid this outcome as affordability is a major political concern going into the midterm elections in 2018. Earlier, it was reported that the EPA considered delaying the proposal by at least a full year.
Benchmark Chicago Board of Trade?soybean Futures rose 1.3% on the news, and soyoil, an important feedstock for biofuels surged 3.5%, reaching a four-month peak.
"This administration put a high priority on petroleum, and I believe there was some concern that green energy might be forgotten. According to this article, it's not true," said Craig Turner a grain broker with StoneX.
The EPA said that it is still reviewing the comments received on the proposed rule. The agency stated that, as it has been publicly stated in court documents, the agency hopes to complete the rule in the first quarter 2026.
The EPA will also 'decide whether or not to require large refiners to compensate for gallons that were exempted from the small?refinery program. This decision could have a significant impact on overall biofuel blending quotas.
In August, the EPA cleared a backlog containing more than 170 requests for small refinery exemptions dating back to 2016. Since then, it has granted additional exemptions. Biofuels and their legislative allies are urging the administration that refiners must offset 100% of the gallons exempted, but the oil industry has been resisting these obligations. The EPA is seeking comments on various proposals ranging from 100% reallocation to zero. Previously, it was reported that the EPA was considering a plan to allow refiners offset 50% of these exempted gallons. (Reporting by Jarrett Renshaw, additional reporting Karl Plume, editing by Chizu Nomiyama).
(source: Reuters)
