Trump Plans Biofuel Quota Boost, Seeks to Crimp Imports
(Bloomberg) -- The Trump administration is proposing oil refiners blend more biofuels into gasoline and diesel next year, while seeking to discourage the use of imported supplies.
The plan unveiled by the Environmental Protection Agency on Friday would require refiners to mix a record 24.02 billion gallons of biofuels into conventional diesel and gasoline — nearly 8% higher than the 2025 target.
The proposal comes as President Donald Trump seeks to revamp aspects of the Renewable Fuel Standard program created by Congress two decades ago to bolster domestic demand and support rural communities. Beyond merely laying out annual quotas, the agency’s blueprint advances changes meant to deter imports and spur more US biofuel production instead.
“We are creating a new system that benefits American farmers,” EPA Administrator Lee Zeldin said in a release. “We can no longer afford to continue with the same system where Americans pay for foreign competitors.”
It’s the first major milestone for renewable fuel policy under Trump this year, helping shed light on how the president will approach an issue that proved especially controversial during his first term in office, when he struggled to balance demands from then oft-warring oil refiners and ethanol producers.
The proposed quotas boosted ethanol and soybean interests. Ethanol producer Green Plains Inc. jumped 20%, the most on a closing basis in five years, while Archer-Daniels-Midland Co. gained 4.7% and Bunge Global SA climbed 5.7%.
The proposal also lifted soybean oil futures in Chicago, which climbed as much as 6.2%. Renewable identification numbers, or RINs, tracking compliance with biomass-based diesel targets, gained 20% to $1.16, the biggest increase since last July. Credits tracking conventional ethanol climbed 18%.
The administration is so far dodging one of the thorniest issues — whether to grant some small refineries’ bids to be exempted from past years’ quotas and how to account for any waived volumes. The EPA said it was still determining how to address the matter but expected to make that clear before 2026 and 2027 quotas are finalized.
For biomass-based diesel typically made from soybeans and used cooking oil, the EPA is proposing a 2026 credit-based target it says would amount to 5.61 billion gallons, representing a 67% jump from the 3.35 billion gallons required this year. That’s broadly in line with what had been sought by a coalition of some large oil and biofuel interests, including the American Petroleum Institute and Clean Fuels Alliance America.
Those groups had also pushed for a higher overall biofuel-blending quota of 25 billion gallons in 2026. The proposed target falls under that level the next two years, with the EPA proposing an overall 2027 quota of 24.46 billion gallons.
The EPA plan was lauded by ethanol and biodiesel producers as well as lawmakers from soybean- and corn-heavy states, with Senator Joni Ernst, a Republican from Iowa, calling it a sign the “administration is committed to championing rural America.”
Integrated oil companies have increasingly linked arms with biofuel interests to champion the mandate, as more of them convert refineries to produce renewable diesel and generate the RINS used to show quotas have been fulfilled.
Yet the proposed quotas were decried by refiners that lack enough blending capacity to independently generate sufficient RINs and are uniquely exposed to higher credit costs. They had lobbied the agency for far more modest targets, warning aggressive quotas could outpace production, hiking the cost of compliance credits and putting domestic refining capacity in peril. The Fueling American Jobs Coalition that represents independent refiners and union workers called it “a gut punch.”
“These unrealistic mandates do not just threaten the future of independent refining; they endanger our existence today,” the group said by email. “EPA’s proposal would threaten many of America’s last remaining refineries, deepening our nation’s reliance on foreign fuel imports and sending consumer energy costs soaring. This stands in stark contrast to President Trump’s energy agenda.”
Discounted Credits
The EPA is proposing to halve the number of RINs awarded to biofuels that are imported or made in the US using foreign feedstocks, so each gallon generates half the credits awarded to domestic rivals. Roughly 45% of biomass-based diesel and its ingredients came from other countries last year.
The administration cast the proposed shift as promoting “national energy independence” and aiding American farmers, already on the front lines of Trump’s effort to rebalance trade flows with widespread tariffs. But it will come at the expense of biofuel producers with international footprints, potentially lowering the value of their foreign-made feedstocks.
The EPA also is proposing to lower the number of credits awarded to renewable diesel, jet fuel and co-products from 1.7 per gallon to 1.6, a shift meant to account for fossil-fuel based hydrogen found in most of the supplies. That compares with 1.5 for biodiesel, a similar yet chemically different product. The planned shift responds to criticism from biodiesel advocates who said some fuels have been unfairly discounted.
Companies would also be compelled to keep additional records on their purchases or transfers in a bid to thwart the use of fraudulent cooking oil and foreign supplies wrongly labeled as domestic.
The EPA is moving to set biomass-based diesel quotas as RINs, not on a per-gallon basis, and it is seeking to close an opening for electricity to count as a renewable fuel under the program. That would prevent generating credits from charging electric vehicles with power made from sources such as woody biomass.
(Updates with details on exemptions, industry and lawmaker reaction beginning in 11th paragraph.)
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