By Stephanie Kelly and Jarrett Renshaw
NEW YORK (Reuters) -The Trump administration’s push to discourage the use of foreign feedstocks in domestic biodiesel could lead to higher energy prices for U.S. consumers and restricted domestic production, according to some refining and biofuel trade groups.
The warning reflects ongoing friction between President Donald Trump’s Environmental Protection Agency and the administration’s traditional allies in the energy and agriculture industries over biofuels policy.
Trump has promised to slash consumer energy costs, but is also trying to advance his America First agenda to support domestic production through trade protectionism – which can often make costs go up instead.
At issue is a proposal from the EPA in June that would for the first time allocate only half as many tradable renewable fuel credits to biodiesel that is either imported or made with foreign feedstocks.
Under the Renewable Fuel Standard, refiners must blend large volumes of biofuels into the U.S. fuel supply or purchase the credits, called RINs, from those that do.
While meant to help domestic farmers and producers, the new proposal – set to be finalized this autumn – would place unprecedented demand on domestic raw materials needed to make biodiesel like soybean oil, used cooking oil, and animal fat, in a market that currently must look abroad to meet its needs.
Meanwhile, restricting the number of RINs that can be generated through such imports will raise credit prices, with a potential spillover impact on diesel and home heating oil, according to the industry groups.
“This credit restriction … will jeopardize the economic viability of renewable fuel production assets and raise overall compliance costs for all obligated parties, which ultimately harms U.S. consumers,” Chet Thompson, head of the American Fuel and Petrochemical Manufacturers group representing refiners, said in a July 25 letter to top Republican lawmakers.
The Advanced Biofuels Association also said the policy could mean ramped up consumer costs, by putting a $250 per metric ton premium on domestic versus imported feedstocks, according to a study it commissioned.
“Economic analysis shows this would impose significant costs on U.S. biorefineries, raise fuel prices for millions of Americans, and benefit only a narrow set of stakeholders,” ABFA President Michael McAdams said in a statement.
The White House and EPA declined to comment directly on the price concerns, saying the administration is still seeking public comment on the proposal until August 8.
