By Jarrett Renshaw
ORLANDO, Florida, Feb 26 (Reuters) – The Trump administration has settled on a plan that would require big oil refineries to make up for at least half of the biofuel blending volumes obligations waived in recent years under the Small Refinery Exemption program, according to three sources familiar with the discussions.
The decision could be unwelcome news for larger oil refiners that have argued that additional blending obligations would raise their costs. But it could help the biofuel industry by boosting demand for blending credits.
Under the Renewable Fuel Standard (RFS), oil refineries have to blend billions of gallons of ethanol and other biofuels into their fuel or buy credits, called RINs, from those that do. But small refineries can have those obligations waived if they demonstrate economic hardship.
The question of whether to reallocate those exempted blending obligations to larger refiners is a point of contention between the agriculture and fuel industries.
Biofuel groups have pushed the administration to fully reallocate the exempted gallons, saying it is crucial to support biofuel producers and the farmers growing their feedstocks. Refiners, meanwhile, have warned that reallocation unfairly forces larger plants to cover for smaller rivals, raising their compliance costs and potentially increasing pump prices.
The issue has taken on added significance after the Trump administration processed a large backlog of waiver requests totaling more than 2 billion gallons for the years 2023 through 2025, representing a sizable share of overall renewable fuel blending requirements.
EPA officials in recent weeks have signaled they settled on reallocating at least 50% of the waived volumes for those three years, and that the level could go higher, according to the sources, who asked not to be named discussing the matter.
That reflects a shift in preference toward increased biofuels blending, after the Environmental Protection Agency last year initially sought public feedback on a range of options from zero to 100%.
The EPA did not comment on the Reuters reporting, but said that the agency was considering public comments and aimed to finalize the rule by the end of March.
The White House did not respond to requests for comment about the reallocation plan.
The EPA also sent its proposed 2026 and 2027 biofuel blending quotas to the White House on Wednesday, with a final rule expected before the end of March, an EPA administrator told attendees at an ethanol conference in Florida on Wednesday.
The sources cautioned that no final decision has been made and the approach could change before it is formally released.
(Reporting By Jarrett Renshaw; Editing by Chizu Nomiyama)
