Trump Administration Tells Oil and Biofuels Groups to Hash out New Biofuel Policy

March 27, 2025

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by Jarrett Renshaw (Reuters/MSN) U.S. President Donald Trump's administration has asked oil and biofuels producers to hash out a deal on the next phase of the nation's biofuels policy to avoid the kind of political clashes that marked his first term, according to four people familiar with the matter.

Big Oil and the Farm Belt's biofuels makers are traditional competitors for share in the multibillion-dollar U.S. gasoline market. They have repeatedly fought over details of the U.S. Renewable Fuel Standard, a program that requires billions of gallons of corn-based ethanol and other biofuels to be blended into the country's fuel supply.

The White House directive has already yielded at least two bilateral meetings, including one hosted last week by the American Petroleum Institute, said the sources, who include Will Hupman, API's vice president of downstream policy, and three others who asked not to be named.

At that meeting, representatives discussed issues like the size of future mandated biofuel blending volumes, exemptions for small refiners, and biofuel tax policy, Hupman and the other sources said.

Any agreement reached between the two powerful industries could be adopted by the Trump administration.

"It makes it easier for (the Trump administration) to arrive at whatever number they arrive at if they are hearing from groups that have historically been at the opposite sides of this," said Hupman.

BLENDING VOLUMES AND WAIVERS

Among the most important issues discussed, the U.S. Environmental Protection Agency is preparing new blending mandates under the RFS that will govern volumes for the next two to three years, along with the program's multibillion-dollar compliance credit market.

Three of the sources said the group has already agreed in principle to ask that the EPA significantly raise the mandate for renewable diesel and biodiesel from its current level of 3.35 billion gallons, which the biofuel industry says is far below production capacity.

The range discussed was between 4.75 billion and 5.5 billion gallons, with some wanting higher volumes in 2026 and others pushing for a more gradual rise, the three sources said.

Blending mandates for ethanol, meanwhile, have capped out at 15 billion gallons, and the parties saw little growth prospect due to plateauing demand for gasoline, the sources said.

The groups were also split over small refinery exemptions to the RFS, one of the most controversial and divisive issues, the sources said.

In Trump's first administration, the EPA approved a record number of such exemptions, letting small refiners sidestep their blending obligations, and triggering political backlash from his Republican allies in the Farm Belt who said it punished farmers.

Former President Joe Biden sought to do away with the exemptions, triggering legal challenges that reached the U.S. Supreme Court earlier this month. Several exemption requests are pending before the EPA.

The groups were split over whether the administration should force other refiners to make up for any exempted blending volumes, a position opposed by the U.S. refining industry, the sources said.

Another crucial issue discussed at last week's meeting was the fate of a new tax credit created for biomass-based diesel under the Biden administration but was not finalized. The program, known as 45Z, replaced a flat $1 per gallon blenders credit and instead rewards producers based on the carbon intensity of their fuels.

Trump and Republicans have not said whether they would move forward with 45Z.

Some at the meeting, including the National Association of Truck Stop Operators, or NATSO, backed a return to the blenders credit while others wanted to support the new 45Z tax credit, according to the sources.

"There was no consensus other than a consensus to keep talking," said one attendee.

The discussions marked a new phase of cooperation between the Farm Belt and Big Oil, according to Hupman.

He said the divide between the industries has softened in recent years as major refiners like Marathon Petroleum and Valero have invested in biofuels production.

"Our companies have evolved as the fuels landscape has evolved," said Hupman. "We have a realization that the RFS is here to stay and we want to make sure it functions as efficiently as intended." READ MORE

Related articles

Future of Biofuels Hinges on Industry Agreement (OilPrice.com)
Trump urges oil and biofuel groups to reach consensus on biofuel policy: The initiative seeks to bridge the gap between two historically opposing sectors: Big Oil and the Farm Belt’s biofuel producers. (Mobility Plaza)
The lions really are lying down with the lambs (Scott H. Irwin/LinkedIN)
Oil, biofuel groups meet to align on RFS policy (Argus Media)
Small refineries ask Trump for ‘seat at the table’ in RFS negotiations (Biomass Magazine)
Biofuels and Petroleum Groups Reach Rare RFS Deal -- Kurt Kovarik, vice president of federal affairs, Clean Fuels Alliance America, says it is a historic agreement. (AgWeb)

Excerpt from OilPrice.com: During the last Trump presidency, the biofuels sector took a hit for more liberal issuing of waivers allowing small refineries to bypass laws requiring a certain level of biofuels blending. And many industry insiders expected this pattern to continue in the second Trump presidency. Already, the number of petitions for exemptions from the Renewable Fuel Standard, which operates at a federal level, “has risen dramatically in recent months” according to the University of Illinois economist Scott Irwin. There are currently 139 such petitions pending for compliance years 2016-2025, according to reporting by Agri-Pulse this week.

Now, the biofuels industry is coming off a multi-year boom, with record-breaking demand. But there is serious concern that the honeymoon will soon be over. Tensions during the current term have been ramped up significantly by tariffs on Canadian imports, as feedstocks from Canada have become an integral part of the United States biofuels industry. A lack of policy clarity has led many to assume the worst, and biodiesel plants on both sides of the border have slowed down production or been shelved entirely.

"If this uncertainty drags on, which is what we expect, the biodiesel and renewable diesel industry will contract but not disappear. It will shrink, painfully at times," said Paul Niznik, director of energy at Capstone LLC in Houston. “The contraction of the green fuels sector could also hurt rural communities and efforts to decarbonize the economy,” added Reuters.

While the announcement on Thursday could speed up the policy process by putting the decision-making back in the hands of the industry, it may be no easy task for Big Oil and biofuels interests to come to a quick consensus. READ MORE

Excerpt from Argus Media: Energy and farm groups met last week at the American Petroleum Institute to negotiate a joint request for President Donald Trump's administration as it develops new biofuel blend mandates, according to five people familiar with the matter.

The private meeting involved groups from across the supply chain, including representatives of feedstock suppliers, biofuel producers, fuel marketers, and oil refiners with Renewable Fuel Standard (RFS) obligations. The groups coordinated earlier this year around a letter to the Trump administration on the need to update the RFS and are now seeking agreement on other program elements.

According to the people familiar with the matter, the groups agree on pushing the Environmental Protection Agency (EPA) to set higher blend mandates under the program's D4 biomass-based diesel and D5 advanced biofuel categories. Groups support slightly different volume targets that are nevertheless all in "a rounding number of each other" in the D4 category, according to one lobbyist.

But there is still disagreement about whether to ramp up mandates quickly in 2026 or provide a longer runway to higher volumes. Clean Fuels Alliance America and farm groups have publicly supported a biomass-based diesel mandate of at least 5.25bn USG starting next year, which could justify a broader advanced biofuel mandate above 9bn USG, according to the people familiar, though others worry about fuel cost impacts if mandates spike so quickly.

The current mandate for 2025 is 7.33bn USG in the advanced biofuels category, including a 3.35bn USG mandate for the biomass-based diesel subcategory, so the volumes being pushed for future years would be a steep increase.

The RFS, highly influential for fuel and commodity crop prices, requires oil refiners and importers to blend annual amounts of biofuels into the conventional fuel supply or buy Renewable Identification Number (RIN) credits from those who do.

The idea behind the groups' coordination is that the Trump administration might more quickly finalize RFS updates if lobbyists with a history of sparring over biofuel policy can articulate a shared vision of the program's future. One person familiar said the effort comes after the Trump administration directed industry to align biofuel policy goals, though others said they understood the coordination as largely voluntary. EPA did not provide comment.

There is less agreement around the program's D6 conventional biofuel category, which is mostly met by corn ethanol. Oil groups have in the past criticized EPA for setting the implied D6 mandate at 15bn USG, above the amount of ethanol that can feasibly be blended into gasoline, though excess biofuels from lower-carbon categories can be used to meet conventional obligations. Ethanol interests support setting the D6 mandate even higher than 15bn USG, which could be a tough sell.

The discussions to date have not involved targets for D3 cellulosic biofuels, a relatively small part of the program. A proposal to lower 2024 volumes has hurt D3 credit prices, signaling that future mandates are effectively optional, according to frustrated biogas executives, and has reduced the salience of the issue for other groups.

A proposal from President Joe Biden's administration to create a new category called "eRINs" to credit biogas used to power electric vehicles has similarly not come up. "We're not expecting to see any attempt to include eRINs in this next [RFS] proposal," Renewable Fuels Association president Geoff Cooper told Argus earlier this month.

The meeting last week was largely oriented around the RFS, though a National Association of Truck Stop Operators representative raised the issue of tax policy too. The group has been frustrated by the expiration of a long-running blenders credit and the introduction this year of a less generous credit for refiners, which is only partially implemented and has spurred a sharp decline in biomass-based diesel production.

But others involved in negotiations, while they acknowledge tax uncertainty could hurt their case for strong mandates, are trying to avoid contentious topics and focus mostly on volumes. Republican lawmakers are separately weighing whether to keep, repeal, or adjust that credit to help out fuel from domestic crops, and there is no telling how long that debate might take to resolve.

Another thorny issue discussed at the meeting is RFS exemptions for small refineries. Biofuel producers strongly oppose such waivers and say that exempted volumes should at least be reallocated among facilities that still have obligations. Oil groups have their own views, though it is unclear how involved the American Fuel and Petrochemical Manufacturers — which represents some small refiners and has generally been more critical of the RFS than the American Petroleum Institute — are in discussions.

EPA is aiming to finalize new volume mandates by the end of this year, people familiar with the administration's thinking have said, though timing for a proposal is still unclear. Future conversations among energy and farm groups to solidify points of unity — and strategize around how to downplay disagreements — are likely, lobbyists said.

RIN prices rally

Speculation over the trajectory of the RFS, and the potential for higher future volumes, supported soybean oil futures and widened the bean oil-heating oil (BOHO) spread. The BOHO spread maintains a positive correlation with D4 RIN prices as a widening value raises demand for D4 credits as biofuel producers look to offset higher production costs. READ MORE

Excerpt from Biomass Magazine: A group of small refineries on April 4 sent a letter to President Donald Trump urging him “to send the multi-national oil and biofuels companies back to the drawing board to come up with a biofuels policy that does no harm.”

The letter, signed by representatives of American Refining Group Inc., Hunt Refining Co., Calumet Inc., Par Pacific Holdings Inc., Ergon Inc., Placid Refining Co. LLC, San Joaquin Refining Co. Inc and The San Antionio Refinery LLC, references reports that oil and biofuel groups have been meeting with White House officials to negotiate a compromise on upcoming Renewable Fuel Standard renewable volume obligations (RVOs).

Within the letter, the small refineries criticize the RFS, claiming the program has harmed their operations, and ask Trump to ensure they have “a seat at the table to ensure that the voices of small refineries are heard.”

The refineries claim that any increased in RFS RVOs will result in increased renewable identification number (RIN) prices that cause them harm. “Because the parties charged with giving you their recommendations are multi-national oil companies (that are also the world’s largest biofuel producer), and independent biofuels producers, their recommendations overlook the harm to small refineries and consumers,” they wrote.

The small refineries ask Trump to pair any RFS RVO increases with “small refinery hardship relief.”

"We would welcome a seat at the table at the next meeting to ensure that all interested parties’ interests are considered,” the groups continued in the letter.

Under RFS regulations, small refineries are able to petition the EPA to waive their RFS blending obligations due to disproportionate economic hardship. According to EPA’s SRE data dashboard, 414 such petitions have been filed with the agency for RFS compliance years 2011 through 2025. To date, the EPA has approved 121 SRE petitions, denied 101 SRE petitions, and declared 13 petitions ineligible. An additional 23 petitions were withdrawn by the small refineries that filed them. There are currently 156 SRE petitions pending with the agency, including two for compliance year 2016; one for compliance year 2017; 38 for compliance year 2018; 27 for compliance year 2019; 28 for compliance year 2020; 17 for compliance year 2021; 10 for compliance year 2022; 12 for compliance year 2023; 15 for compliance year 2024; and six for compliance year 2025. READ MORE