Trade groups and companies warn that Trump's America First policy on biodiesel could be costly to US businesses, consumers and trade groups.

According to some trade groups in refining and biofuels, the Trump administration's efforts to discourage the use foreign feedstocks for domestic biodiesel may lead to higher prices and a reduction of domestic production.

The warning is a reflection of the ongoing tension between the Environmental Protection Agency under President Donald Trump and its traditional allies, the energy and agricultural industries.

Trump has promised that he will lower consumer energy prices, but he is also trying to advance the America First agenda by supporting domestic production via trade protectionionism. This can sometimes lead to higher costs.

The proposal made by the EPA back in June would, for the first-time ever, only allocate half the number of renewable fuel credits that can be traded to biodiesel imported from abroad or produced with foreign feedstocks.

The Renewable Fuel Standard requires refiners to blend biofuels in large quantities into U.S. gasoline or buy credits (called RINs) from those who do.

The new proposal, which is set to be finalized in the fall, will place an unprecedented demand for domestic raw materials that are needed to produce biodiesel, such as used cooking oil and animal fat. This would affect a market currently dependent on imported products to meet its requirements.

According to industry groups, limiting the number of RINs generated by such imports could increase credit prices and have a spillover effect on home heating oil and diesel.

In a letter sent to Republican legislators on July 25, Chet Thompson, the head of the American Fuel and Petrochemical Manufacturers representing refiners said that the credit restriction would "jeopardize" the economic viability and compliance costs of all parties.

According to a study commissioned by the Advanced Biofuels Association, a policy that places a $250 premium per metric tonne on domestic feedstocks compared to imported feedstocks could increase consumer costs.

In a press release, ABFA President Michael McAdams stated that "economic analysis shows this will impose significant costs on U.S. Biorefineries and raise fuel prices for Americans."

The White House and EPA declined directly to comment on price concerns. They said that the administration still seeks public comments on the proposal up until August 8.

Other biofuel producers backed this proposal.

"American farmers are in desperate need of all the demand that they can get." "We should develop our capacity in the United States, instead of relying solely on used cooking oil imported from China or giving Brazilian feedstocks preference at the expense U.S. producers, and their farm partners," Emily Skor CEO of Growth Energy said.

Negative effects are likely to be felt by U.S. companies like ADM, Bunge, and Cargill, which have global assets, and also foreign companies that have significant U.S. operations. Nufarm, an Australian company that contracts with South American farmers to grow new oilseeds crops, is one example.

UNCERTAIN NUMBERS

According to renewable fuel lobbyists, and officials from companies, the biofuel industry did not seek import shifts in EPA's proposal of June.

Multiple sources claim that the White House has held meetings with representatives of industry to discuss unintended effects.

The EPA proposal from June was intended to establish biofuel blending requirements for the next two-year period.

The mandate included a quota for 7.12 billion biomass diesel RINs by 2026, which is a measure of the number tradable credit generated from blending fuel. It was projected that this mandate would result in the blending 5.61 billion gallons.

The American Petroleum Institute (an oil trade group) and the biofuels industry had joined forces to lobby the government to set the biomass-based diesel mandate at 5.25 billion gallons. In 2025, the mandate was only 3.35 billion gallons.

There are still scenarios that the EPA could use to arrive at a lower-volume result.

According to industry analysts, if all biodiesel used in the U.S. was made from domestic feedstocks next year, the RIN mandate could only produce 4.45 billion gallons.

According to analyses, removing the import feedstock penalty could increase this number.

One industry analyst who spoke candidly and asked to remain anonymous said: "That probably aligns what the administration is trying to do with regards to supporting the agricultural side of things, including farmers." (Reporting and editing by Marguerita Choy)

(source: Reuters)