Trump Administration Plans to Reallocate Waived Blending Quotas Over Three Years

Posted on 09/14/2019 8:45 PM

White House biofuel waiver reallocation plan was first suggested by USDA in 2018

The Trump administration reportedly agreed to boost the biofuels sector by reallocating three years of waived biofuel blending quotas beginning in 2020. EPA would begin calculating waivers into future quotas starting with the 2020 targets. The determinations would come via a three-year rolling average of exemptions, so the 2020 targets would reflect waivers issued in 2016, 2017 and 2018. The apparent new plan comes on top of other concessions that administration officials had already developed with the aim of encouraging greater U.S. demand for ethanol made from corn.

The key now is whether or not ethanol proponents will sign on to the latest package. It is unclear whether or not the White House will still announce the plan if it lacks such support.

Note: Sources say the unfolding RFS plan is consistent with what USDA recommended as far back as early 2018. The “reallocation” can be accomplished by projecting small refinery waivers right in the formula that sets percent standards as noted in prior public comments by USDA's Office of the Chief Economist (OCE). The OCE made a rare public comment on this topic via a public document and in interagency discussions — using some average of prior waivers was recommended. EPA's response was to use just the prior year.

In this year's docket, some recommended this again and also to raise the mandate slightly to accommodate the ACE remand and also to raise biodiesel a modest amount in 2021 as there is a legislated jump of 500 million gallons of non-cellulosic advanced fuels in 2022.

In the following links, you can see the history of this topic. The point: this was suggested in interagency and rejected by EPA.

Background links:

Take a look at this year's interagency docket: Link. Go to the PDF for OMB to EPA at 10:22 pm... Link. The summary of interagency comments starts on page 3 of the pdf.

You can see the following three clipped points in the links:




Also, note the table that shows the ACE remand and biodiesel phase in. A raise in mandates or an inclusion of projected SREs can result in similar outcomes relative to where we are now.

As for 2018, this is a link to public comments made by the Office of the Chief Economist at USDA making the same comments about using an average of the past SREs to project SREs in the formula back in 2018. It is very unusual for one agency to publicly comment on another agency's rule and these types of comments are not cleared unless there is internal support.

Bottom line: It appears it may have taken EPA and the White House to get to the same suggestion that was offered as early as 2018. As noted previously, will the latest apparent White House offer be enough to get ethanol interests to sign on?



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