A US oil refining trade group wrote to top Republican lawmakers to criticize federal biofuel policies that are favorable to farmers and to voice opposition to a bill that would authorize higher-ethanol gasoline blends.
"Recent policy decisions will negatively impact consumers, our members, and the President's energy dominance agenda," the American Fuel and Petrochemical Manufacturers (AFPM) wrote in a 25 July letter to House speaker Mike Johnson and Senate majority leader John Thune, which was obtained by Argus.
AFPM has long criticized biofuel policies it says hike energy costs and threaten domestic refining capacity. But the group was previously noncommittal on legislation that would allow the year-round sale of 15pc ethanol gasoline (E15), which nearly passed Congress late last year. The bill — previously seen as a narrow compromise with oil interests since it also offers some small refiners targeted relief from biofuel blend mandates — is a top priority for ethanol advocates this year and could now require further changes to assuage the oil industry.
The outreach suggests that Republicans' efforts to boost fossil fuel companies after an unfavorable regulatory environment during former-president Joe Biden's tenure are not entirely succeeding. And the letter is notable too given some other oil companies' recent support for stronger biofuel incentives. The American Petroleum Institute joined a lobbying push this year for a steep increase in biomass-based diesel quotas and has supported the E15 bill.
AFPM focuses much of the letter on the Renewable Fuel Standard, which requires oil refiners and importers to annually blend certain amounts of biofuels or buy credits from those that do. The Trump administration recently proposed requiring record-high biofuel blending the next two years and halving credits for fuels made abroad or from foreign feedstocks. The US plans to finalize those new biofuel quotas before November.
The changes could mean not just pricier credits for oil refiners with limited biorefining capacity but also thinner margins for companies that saw renewable diesel as their way to escape the program's mounting compliance costs.
The fuel lacks the blend limits of ethanol and biodiesel and can be made through a similar hydrotreating process as crude refining, but renewable diesel producers say domestic feedstock options are limited. US refiners used South American tallow and Asian used cooking oil to make more renewable diesel than ever before last year, frustrating farm groups that see foreign supplies as curbing demand for domestic crop-based fuels and feedstocks.
The letter also faults the Environmental Protection Agency for its delays resolving a long backlog of small refiners' requests for program exemptions and signaling it could require larger companies to compensate for any future waivers by blending more biofuels themselves.
AFPM did not confirm the letter, although the group told Argus it has "deep concerns with federal biofuel policy and the latest [Renewable Fuel Standard] proposal, especially" and that it is sharing these concerns with the administration and Congress.
The letter points to other policies too, including "eleventh-hour" emergency waivers allowing E15 year-round in 2025. Some refiners had already spent millions of dollars preparing for a now-delayed shift to a lower-volatility summertime gasoline blend in the midcontinent, which would have allowed E15 blending in that region.
AFPM is also frustrated with recent legislative changes to a biofuel tax credit — upping subsidies for corn ethanol in future years while cutting off eligibility for renewable diesel made from many foreign inputs — and with tariffs on renewable feedstock imports.
Valero and Phillips 66 — which both told analysts last week that they would throttle biofuel output because of poor margins — are members of AFPM alongside other major renewable diesel producers like Marathon Petroleum, Chevron, and HF Sinclair.
