The Obama
administration signed its final plan for renewable fuel use in the United
States last week, leaving an oil industry reeling from the most aggressive
biofuel
targets yet as President-elect Donald Trump takes over.
The Renewable
Fuel Standard (RFS) program, signed into law by President George W. Bush, is
one of the country's most controversial energy policies. It requires energy
firms to blend ethanol and biodiesel into gasoline and diesel.
The policy was
designed to cut greenhouse gas emissions, reduce U.S. reliance on oil imports
and boost rural economies that provide the crops for biofuels.
It has pitted
two of Trump's support bases against each other: Big Oil and Big Corn. The
farming sector has lobbied hard for the maximum biofuel volumes laid out in the
law to be blended into gasoline motor fuels, while the oil industry argues that
the program creates additional costs.
Balancing oil
and farm interests is likely to prove a challenge for Trump, who has promised
to curtail regulations on the oil industry but is already being reminded by
biofuels advocates of the importance of the program to the American Midwest,
where he received strong support from voters on Nov. 8.
Oil groups are
renewing their calls to change or repeal the program following Wednesday's
announcement, when the Environmental Protection Agency (EPA) set record
mandates for renewable fuels - for the first time hitting levels targeted by
Congress nearly a decade ago..
The EPA plan
is "completely detached from market realities and confirms once again that
Congress must take immediate action to remedy this broken program," said
Chet Thompson, President of the American Fuel and Petrochemical Manufacturers,
in a statement.
It is unclear
what Trump's plans for the program will be and his transition team did not
respond to Reuters' requests for comment.
Both camps are
expecting an administration receptive to their demands, though both have
expressed concern and uncertainty over Trump's plans for the program, according
to experts, industry and political sources.
The
installation of climate change skeptic Myron Ebell as head of the transition at
the EPA bolstered oil industry confidence Trump will swing their way. In
September, Trump appeared to briefly echo the views of his supporter,
billionaire Carl Icahn, who expressed concern about the program.
Icahn, who
owns a stake in an oil refiner, renewed those criticisms last week, saying the
ethanol credit market generated by the program is susceptible to manipulation
and harming independent refiners.
PRO-ETHANOL
CAMPAIGNING
The
president-elect campaigned on a pro-ethanol platform when he visited America's
farm states and biofuels advocates expect he will keep the RFS strong, maintaining
annual targets at the minimum set forth by Congress.
"Mr.
Trump will not turn his back on the American heartland, we believe in
him," said Annette Sweeney, a former state representative from Iowa who
was a member of the Trump's agricultural advisory committee during his
candidacy.
"To a
certain extent, we are on higher ground. You always want to be on higher
ground," said Bob Dinneen, head of the Renewable Fuels Association,
referring to the increase.
"We’ll be
able to demonstrate the marketplace can absorb 15 billion gallons of ethanol.
We can put this all behind us. As we look to 2018... there's no reason to go
back," he said.
The renewables
industries have already started to emphasize their place among American-made
fuels, something experts expect will appeal to Trump.
"There
are a lot of good things to be said about second-generation fuels, even from
the new administration’s perspective," said Harvard University professor
and former Obama administration advisor James Stock.
"All the
new administration needs to do is embrace the original ... vision of the
RFS," he said.
Reuters.
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