May 2, 2018 / 5:12 PM / 21 days ago

UPDATE 2-White House sets meeting with senators on biofuels next week -sources

(Adds details on exemptions and more background)

By Jarrett Renshaw

May 2 (Reuters) - The Trump administration has invited a group of U.S. senators to the White House early next week to discuss biofuels policy, the latest in a series of such meetings aimed at helping refiners cope with the Renewable Fuel Standard, according to two sources familiar with the matter.

The senators will include Republicans Chuck Grassley and Joni Ernst of corn state Iowa, along with Pat Toomey and Ted Cruz of refinery states Pennsylvania and Texas, according to the sources, who asked not to be named. The meeting will take place on Monday or Tuesday, they said.

White House spokeswoman Kelly Love did not immediately respond to a request for comment.

Biofuels groups have complained that the Trump administration is granting too many exemptions to the U.S. Renewable Fuel Standard (RFS), which requires refineries to mix increasing amounts of biofuels like corn-based ethanol into the nation’s fuel or to purchase credits from rivals that do. The law was intended to support farmers, reduce pollution, and cut petroleum imports. Exemptions were meant to benefit smaller refiners who may not be able to do the blending or purchase the credits.

While the 2005 regulation has created a multibillion-gallon market for ethanol, refiners complain the requirements now costs them hundreds of millions of dollars per year. They have urged the Trump administration to make changes, like capping the price of blending credits or shifting the blending obligation away from refiners entirely.

The ethanol industry has vehemently opposed those proposals, saying they would undermine demand for biofuels and also hurt farm income.

Numerous meetings on the topic since late last year appeared to end in deadlock. Last month, President Donald Trump announced he would consider expanding the times of year that high ethanol blend gasoline can be sold, a concession to the corn industry keen to boost its share of the motor fuel market.

At the same time, Trump’s Environmental Protection Agency (EPA) has been issuing more RFS exemptions to small refineries than the Obama administration did. While plants receiving the exemptions are small, their owners are some of the largest U.S. refiners, including Andeavor, which Marathon Petroleum hopes to acquire for $23 billion.

The surge in exemptions follows a federal court ruling in August that says the EPA was using guidelines in denying applications that were too strict. Biofuel groups say the EPA is using the court decision to justify gutting the RFS.

Prices of compliance credits have plummeted on news of the refinery exemptions.

The EPA also granted a waiver to a refinery owned by billionaire Carl Icahn, a former adviser to President Donald Trump, according to two industry sources briefed on the matter.

Oil majors ExxonMobil and Chevron have also applied for waivers at their small U.S. refineries.

A biofuels trade group asked a federal court on Tuesday to rule whether the EPA violated the law in granting a growing number of small refineries exemptions from renewable fuel laws, according to a court filing. (Reporting by Jarrett Renshaw; Writing by Richard Valdmanis; Editing by David Gregorio)

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