Sources say that Trump EPA will shift at least half the waived biofuel obligation to big refiners

According to sources familiar with discussions, the Trump administration has agreed on a plan requiring 'big oil refineries' to cover?at least half the obligations for blending biofuels that were waived over the past few years under the Small Refinery Exemption Program.

This decision may not be welcomed by larger oil refineries who have claimed that higher blending requirements would increase their costs. It could benefit the biofuels industry by increasing demand for blending credit.

According to the Renewable Fuel Standard, oil refineries are required to mix billions of gallons ethanol or other biofuels with their fuel, or purchase credits (called RINs) from those who do. Small refineries may be exempted from these obligations if they can prove economic hardship. It is a contentious issue between the fuel and agriculture industries whether or not to reallocate those exempted blend obligations to larger refiners.

Biofuel groups have called on the administration to "fully reallocate" the exempted gallon, stating that it was crucial to support the biofuel producers as well as the farmers who grow their feedstocks. Refiners have also warned that reallocation unfairly forces large plants to cover smaller competitors, increasing their compliance costs and possibly increasing pump prices.

This issue is of particular importance after the Trump Administration processed a backlog of waivers totaling over 2 billion gallons from 2023 to 2025. These requests represent a significant share of the overall requirements for renewable fuel blends.

Sources who requested anonymity in discussing the issue said that EPA officials have indicated they are "settled" on reallocating 50% of the waived volume for these three years and the amount could be higher. This reflects the shift from zero to 100 percent biofuels blends, which was initially requested by the Environmental Protection Agency last year. The EPA didn't comment on the report, but did say that it was evaluating public comments and aimed at finalizing the rule by the end of March.

The White House has not responded to requests for comments about the reallocation plans. On Wednesday, the EPA sent the White House its proposed biofuel blending quotas for 2026 and 2027. A final rule is expected 'before the end March,' an EPA administrator said at an ethanol event in Florida.

Sources cautioned, however, that no decision had been made yet and the strategy could change before it was formally released. Reporting by Jarrett Renshaw, Editing by ChizuNomiyama

(source: Reuters)