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Trump Officials Agree on Plan to Boost Ethanol, Biodiesel
USAgNet - 10/03/2019

The Trump administration has agreed to a new plan for boosting renewable fuels and offsetting waivers exempting oil refineries from mandates to use them, according to three people familiar with the matter who asked for anonymity before a formal announcement.

Bloomberg reports that the tentative agreement, which follows weeks of negotiations, would allow the Environmental Protection Agency to offset those waivers in response to criticism from industry advocates and Midwestern politicians that the exemptions have hurt demand for corn-based ethanol and soybean-based biodiesel.

Under the deal, the EPA would factor recent waivers into new annual biofuel quotas, by adjusting the targets to reflect a three-year rolling average of exemptions. White House officials also rejected a bid by oil industry allies to prevent spikes in the prices of biofuel compliance credits refiners use to prove they have fulfilled the targets.

The agreement reflects a deal pitched by farm-state senators to the president earlier this month.

Ethanol producers surged on the news. Green Plains Inc., which had been trading below Monday’s closing price, rose as much as 2.5%. Pacific Ethanol Inc. jumped as much as 9.4%.

Renewable Identification Numbers tracking 2019 conventional biofuel consumption targets jumped 12% to 19 cents a piece -- the steepest one-day gain since Sept. 16, according to broker data compiled by Bloomberg.

The deal could still unravel as administration officials work to translate broad commitments into formal regulations. There is a narrow window for the administration to codify the changes, as the EPA is legally required to finalize 2020 biofuel-blending quotas by Nov. 30.

Biofuel producers and supporters have warned the White House of potential political repercussions in Iowa and other politically important swing states. Iowa helped send Donald Trump to the White House in 2016, after he pledged to support ethanol.

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