This week, two anonymous sources told Reuters that the Environmental Protection Agency (EPA) is considering revising biofuel quotas downward after years of underperformance from the biofuel industry.
Biofuel, which is predominantly made from corn in the US, is a political minefield in the Trump Administration.
On the one hand, biofuel processors have enjoyed years of subsidies from the US federal government. The EPA mandates that oil refiners must mix a certain amount of biofuel into their gas and diesel before it is sold in the US, reasoning that cutting oil with biofuel reduces the carbon footprint of fossil fuel use. The quota also helps politicians curry favor with heavy corn-producing midwest states like Iowa, Nebraska, and Indiana, which supported Trump in the most recent presidential elections.
On the other hand oil refiners, another bastion of support for the Trump Administration, oppose having to blend ethanol into their product, arguing that it costs too much to buy ethanol or biofuel credits to come into compliance with federal rules.
In 2007, the US set progressively more ambitious biofuel targets in for oil refiners out to 2022. The Trump Administration tried to revise the targets in favor of oil refiners in 2017, but met staunch opposition and later said it wouldn't cut biofuel quotas.
Now, Reuters says that the EPA will move to reduce the biofuel targets for 2020, 2021, and 2022. "An EPA official confirmed the agency is working with stakeholders on a reset proposal, and aimed to finalize its plan by November 2019," Reuters wrote.
Part of the reasoning behind the attempts to revise targets downwards is that the biofuel industry seems to be lagging. Reuters notes that the EPA's Renewable Fuel Standards targets specify 36 billion gallons of biofuel should be sold in 2022. Biofuel producers only delivered about 20 billion gallons of biofuel to refiners in 2018, with advanced biofuels from algae and other low-impact feedstock falling particularly short of their individual goals. The Renewable Fuels Standard had previously required 26 billion gallons of biofuel to be sold in 2018. Since 2016, biofuels producers have missed the increasingly stringent Renewable Fuels Standards targets. Those who support the Renewable Fuel Standards say that the blended quotas should remain in place to induce more investment in biofuel industries. Those who oppose the standards say that they should be revised in line with projected gasoline demand. Besides being controversial in political arenas, the biofuel industry has also inspired some creative scams, which have predicated several multi-million-dollar judgements against the scammers. In August, an Ohio man was sentenced for millions of dollars in biofuel credit fraud, and in September the Department of Justice reached a settlement with another company that had conducted millions of dollars of biofuel fraud.