November 29, 2018 / 7:12 PM / 13 days ago

Exclusive: EPA lifts advanced biofuel mandate for 2019, keeps ethanol steady -document

WASHINGTON (Reuters) - The U.S. Environmental Protection Agency lifted its annual blending mandate for advanced biofuels by 15 percent for 2019, while keeping the requirement for conventional biofuels like corn-based ethanol steady, according to an agency document seen by Reuters on Thursday.

An empty podium awaits the arrival of U.S. Environmental Protection Agency (EPA) Acting Administrator Andrew Wheeler to address staff at EPA headquarters in Washington, U.S., July 11, 2018. REUTERS/Ting Shen

The mandate includes 4.92 billion gallons for advanced biofuels which can be made from plant and animal waste, a figure that is up from the EPA’s initial proposal in June of 4.88 billion and above the 4.29 billion that had been set for 2018, according to the document.

The requirement for conventional biofuels, meanwhile, remains at 15 billion gallons for 2019, on par with 2018, and the same as proposed by the agency in June.

The EPA is required to formally announce the biofuel mandate figures, which are closely watched by the rival corn and oil industries, by Friday.

Under the U.S. Renewable Fuel Standard, first adopted in 2005, oil refiners are required to blend a certain amount of biofuels, as determined by the EPA, into their fuel each year or purchase blending credits from those that do.

The policy has helped farmers by creating a huge market for ethanol and other biofuels, but oil refiners say that complying can cost them a fortune.

The new figures confirm the agency has declined requests by the corn industry to reallocate biofuel blending obligations previously waived under the small refinery exemptions program, which has been expanded dramatically under the administration of President Donald Trump.

Small refineries can be exempted from the RFS if they prove that complying would cause them financial strain.

The powerful corn lobby and top officials in the U.S. Department of Agriculture have complained for months that the expansion of the waiver program since Trump took office threatens demand for ethanol.

An EPA official told Reuters earlier this week the decision not to reallocate waived volumes was due mainly to timing.

“The primary reason why we’re not reallocating in this rule is because we have no idea what the volume of SREs (Small Refinery Exemptions) will be for calendar 2019 and we won’t know that late 2019, early 2020. All we could do is guess, and we don’t do regulations by guessing here,” the official said.

The Trump administration has also temporarily put on hold processing of current waiver applications as the EPA and the Department of Energy review the scoring system used to evaluate them, sources familiar with the matter told Reuters.

EPA is still expected to rule on current applications, however, before the March 31 compliance deadline for the 2018 calendar year.

Trump has sought to please the corn lobby with a different tweak to U.S. biofuel policy: in October he directed the EPA to draft a rule allowing year-round sales of higher ethanol gasoline blends called E15 - a product restricted during the summer over concerns it contributes to smog.

In an interview with Reuters, Bill Wehrum, assistant administrator at EPA’s Air and Radiation Department, said the agency was on track to finalise the rule before June 1, in time for 2019 driving season.

“We will get it by done,” Wehrum said, adding that they were prepared to be sued over the rule. “I think there’s a virtual certainty that we’re going to get challenged in court. I think we gave a good legal argument,” he added.

Below is a table showing the EPA’s new biofuels volumes mandates:

2017 2018 2019 2020

Cellulosic biofuel (million 311 288 418 n/a

gallons)

Biomass-based diesel (billion 2.0 2.1 2.1 2.43

gallons)

Advanced biofuel (billion 4.28 4.29 4.92 n/a

gallons)

Renewable fuel (billion 19.28 19.29 19.92 n/a

gallons)

Reporting by Humeyra Pamuk; Editing by David Gregorio and Richard Valdmanis

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