Joe Biden’s administration will have to face the nation’s unresolved biofuel law, the US Renewable Fuel Standard (RFS). RFS requires refiners to mix certain volumes of ethanol and other biofuels into their fuel blends or buy credits from others who do. This regulation provides farmers with a vast market for their corn. However, the oil industry opposes it because it poses competition for fossil fuels and incurs higher regulatory compliance costs.
After the coronavirus pandemic which destroyed fuel demand in the US, the refining industry and its political backers requested a relaxation on the RFS requirements for 2021. Biden has not specifically said how he would deal with such issues, which can save the refining industry but anger the agricultural and biofuel industries are also being blown by the health crisis.
According to a proposal from the Environmental Protection Agency (EPA), RFS requirements will be increased from 20.09 billion gallons this year to 20.17 billion gallons next year. However, the proposal was put on hold indefinitely in July due to the pandemic. The current administration will have until November 30 to decide the quota for next year.
The RFS also grants small refineries exemptions (SREs) if they can provide proof that meeting the RFS harms them financially. Trump’s administration was about to quadruple the number of exempt refineries. This prompted an appeal by the biofuel industry which resulted in a court ruling that SREs granted after 2010 should only be approved as extensions.
