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EPA Mulls Counting Ethanol Exports Against Mandates: Sources

  • Thursday, 28 September 2017 11:54


September 27, 2017

The Environmental Protection Agency is considering a change to U.S. biofuels policy that would allow exports of ethanol to count toward the country’s annual biofuels volumes mandates, two sources familiar with the matter told Reuters on Wednesday.

The proposal would represent a significant shift from the original mandate of the 2005 renewable fuel program, designed to increase the amount ethanol and biodiesel in the country’s fuel pool while boosting the U.S. agricultural sector.

The move would benefit U.S. merchant refiners like Valero and PBF Energy, who are required under the U.S. Renewable Fuel Standard to blend increasing volumes of ethanol and other biofuels into the country’s gasoline and diesel every year, at a cost of hundreds of millions of dollars.

The refiners, led by billionaire Carl Icahn, fought to get the Trump Administration to shift the obligation further down the supply chain, but those efforts failed.

The current proposal, still in the discussion stage in the office of EPA Administrator Scott Pruitt, is seen as a way to reduce their financial burden.

Under the program, refiners must either blend the renewable fuels into the fuel pool or buy credits from those who do.

Currently, U.S. biofuels policy only counts fuels blended in the United States toward the annual volumes mandates and does not count ethanol that is produced in the United States and exported for use abroad.

By counting the exports, it would increase the amount of available credits by the equivalent of as much 1 billion gallons of biofuel and push down prices.

The EPA proposed a requirement that refiners and importers blend in 15 billion gallons of corn-based ethanol and other conventional renewable fuels next year. Last year, the United States exported more than 1 billion gallons of ethanol in 2016, mainly to Brazil, Canada and China, according to the Energy Information Administration.

It was unclear if the proposal would require legislative approval. If so, it would face stiff opposition from the powerful corn lobby.

The sources, who asked not to be named because they were not authorized to speak on the issue, said the EPA was considering the idea but had not made a decision.

EPA spokeswoman Liz Bowman did not respond to a request for comment.

Brooke Coleman, executive director of the Advanced Biofuels Business Council, said that counting exports was illegal under the 2007 Renewable Fuels Standard, which was supposed to increase the amount of biofuels used in the United States.

He said making such a change at a time when companies have already invested under the program was wrong and would discourage future investments.

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