Oil, biofuel and farm groups that historically have been in competition for shares of the transportation fuel market have presented a unified request to the Trump administration for higher biofuel usage mandates under the Renewable Fuel Standard.
While there are signs of progress in these groups' convergence after a tumultuous first Trump administration, industry observers warn that key details could still create fractures within the coalition.
In recent weeks, groups representing ethanol, oil, biodiesel and more have met to try and get on the same page on biofuel policy, as first reported by Reuters and confirmed by multiple sources. On Tuesday, the coalition met with the Environmental Protection Agency.
The American Petroleum Institute, National Oilseed Processors Association, Clean Fuels Alliance, Renewable Fuels Association, American Soybean Association and Growth Energy were all part of the meeting, according to a source familiar with the conversations.
EPA is in the process of deciding on renewable volume obligations, or RVOs, to propose for 2026-28. The statutory deadline for the EPA to issue the RVOs was Nov. 1, 2024. However, the agency previously indicated these would likely not be final until December of this year.
During Tuesday’s meeting, the coalition recommended RVOs that all groups support. This includes a 5.25-billion-gallon volume for biomass-based diesel, a 15-billion-gallon differential for ethanol and 10 billion RIN gallons for overall advanced biofuels, according to a source.
The meeting was held to get political staff at EPA to understand the landscape and ensure recommended volumes are robust enough. One of the responses back to the industry was that if EPA goes with these levels, groups cannot come back and ask for more gallons in the comment period or after the final RVOs are released, according to the source.
New landscape in Trump 2.0
This level of coordination is a major shift from the first Trump administration, where some groups ran into conflicts. Tensions came to a head after 2022 projections for gasoline did not come to fruition, meaning ethanol mandates would go above the 10% blend oil groups anticipated.
Scott Irwin (University of Illinois photo) Farm and biofuel groups felt they were “unjustly attacked” because they were promised a set number of gallons per year, said Scott Irwin, a University of Illinois economist who follows the industry.
However, since the first Trump term, there have been some shifts in the landscape. Notably, oil groups have invested in the biofuel sector. Six major oil companies, including BP, Chevron and Shell, have announced 43 biofuel projects that are already operational or expected to start up by 2030, according to a November Rystad Energy analysis.
However, these investments are concentrated in renewable diesel and some in sustainable aviation fuel. Oil groups have largely not invested in ethanol, Irwin pointed out. Investments may allow the interests of oil and some farm groups to coalesce into biofuel policy.
This convergence was on display in February when many of the groups now involved in this RFS coalition wrote a letter to the EPA backing aggressive, multi-year RVOs.
The meetings and conversations that followed were not necessarily mandated by the White House, but had been recommended, according to sources.
EPA signaled to the coalition that it is moving quickly. The agency wants to get a proposal out on the RVOs finalized by the Nov. 30 deadline, according to one source familiar with the talks.
“The signals that we’re getting are that they’re appreciative of us trying to work out issues amongst ourselves before going to talk with them,” the source said of EPA. “Then also going to talk with them collectively sends a strong signal of where a lot of industries are on this.”
The coalition-agreed RVOs for biomass-based diesel are a large jump from previous volumes, but one that biodiesel and soy production groups have argued is necessary.
The EPA listed the volume targets for biomass-based diesel at 2.82 billion in 2023, 3.04 billion in 2024 and 3.35 billion in 2025.
Biodiesel and soy groups argue that previous RVOs did not reflect growth. Domestic production of biomass-based diesel is expected to top 6 billion gallons, with domestic feedstocks expected to support 5.4 gallons of biofuel production in 2026, according to a letter previously sent to EPA.
For ethanol, some are pushing for RVOs above 15 billion gallons. Jonathan Lehman, a lobbyist with the American Coalition for Ethanol, said his group sees higher RVOs as a way to make up for export losses from potential tariffs.
Geoff Cooper (RFA photo)RFA President and CEO Geoff Cooper said his group "has actively participated in conversations with a wide array of stakeholders and organizations, including API, regarding the future of the RFS. We are very encouraged to see the expanding base of support for ensuring future RFS requirements specifically include at least 15 billion gallons of conventional renewable fuels like corn ethanol."
Lack of consensus ahead
The coalition is primarily focused on presenting a unified stance on RVOs but plans to highlight how other policies like tax credits, recent production data and SREs are worth considering, according to a source in the coalition. However, there’s no consensus on many of these issues.
“There’s still major stress points at the same place they were in Trump 1.0,” Irwin said.
Oil and biofuel groups have generally reached consensus on some issues, like the level of advanced biofuel mandates that support renewable diesel. However, there’s still some conflict between oil groups and the conventional ethanol mandate, Irwin said.
These tensions could all come down to the issue of small refinery exemptions (SREs), Irwin said. The first Trump administration granted dozens of these exemptions, which go to facilities that claim complying with the RFS would cause them undue economic harm.
“That was the vehicle that the first Trump administration used to give the RFS a haircut and in particular, bring the conventional ethanol mandate back below the E10 blend wall,” Irwin said.
Based on the initial months of the Trump administration, Irwin said there’s little indication they will approach oil versus biofuel conversations differently.
“It was purely political calculus in Trump 1.0 and it will be purely political calculus in Trump 2.0,” Irwin said. “It was clear under Trump 1.0 that big oil, refiners were in the driver's seat and they mainly got what they wanted. And I think that is likely to be the case under Trump 2.0 as well.”
Groups will be watching for how Trump 2.0 will handle SREs now, and if they’ll be used to reduce the obligated volumes for everyone, or if these will be reallocated. If the obligated volumes exempted are reallocated to the larger refiner, the total volume under the RFS is not impacted.
Irwin said it’s clear not everyone in oil and biofuel groups are on the same page with reallocation. This could be a major sticking point with potentially large impacts on how RVOs are written and implemented.
Retailers split from coalition on tax policy
Another key issue could be how the administration and Congress move on tax policy. NATSO, SIGMA and NACS, which represent fuel retailers and distributors, had originally participated in talks with the coalition, but did not join the EPA meeting.
The fuel retailer groups sent a letter to EPA on Tuesday expressing concern with setting higher advanced biofuel RVOs without reforming tax policy. The groups want to return to the Biodiesel Tax Credit (BTC) that expired at the end of 2024 and was replaced by the 45Z tax credit for clean fuel producers.
They write that the BTC worked with the RFS to incentivize advanced biofuel consumption without increasing prices. By moving the tax incentive to the production side rather than the consumption side, higher RVOs could increase costs for consumers.
Without an extension of the BTC, raising RVOs above 5 billion gallons could increase diesel prices by 30 cents per gallon, the groups write.
A source familiar with the meeting said that tax policy recommendations did not come up, because tax policy does not fall under EPA’s jurisdiction.
While many groups representing farm country, ethanol and biofuel industries have pushed for alterations to the preliminary guidance on 45Z, they have largely backed the credit and encouraged members of Congress to extend it.
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