Biden administration likely to raise ethanol blending volumes for 2021 : Sources

A bioethanol plant (representative image: Wikimedia Commons)

The Biden administration is likely to raise ethanol blending mandates for 2021 above the figure it proposed in December to align with U.S. consumption, according to two sources briefed on the decision.

In December, the U.S. Environmental Protection Agency proposed that refiners blend 13.32 billion gallons of ethanol into the fuel pool, a move that angered farm-belt lawmakers and the industry who said it was too low.

Administration officials huddled at the White House on Tuesday to review options for the mandates, which are being set retroactively because of disruptions caused by the fallout of the COVID-19 pandemic, the sources said.

Under the U.S. Renewable Fuel Standard (RFS), refiners must blend billions of gallons of biofuels into the nation's fuel pool, or buy tradable credits from those that do.

The rule has long been a point of contention between the powerful oil and corn lobbies. While the mandates have set up a multibillion-gallon market for corn farmers and ethanol producers, merchant refiners claim the requirements are costly and threaten to put them out of business.

The administration has not given any indication it plans dramatic changes from its 2020 and 2022 proposals, the sources said.

After the Reuters story on Wednesday, U.S. renewable fuel (D6) credit prices climbed 11% to trade at $1.50 each, traders said.