[NEW YORK] US oil refiners have found an unlikely ally in their opposition to US President Donald Trump’s proposed changes to biofuel policy: China.
A plan to slash incentives for renewable diesel produced from imported feedstocks will disrupt trade, harm US fuelmakers and undermine efforts to slash carbon emissions, a Chinese government agency said in a letter last month to the Environmental Protection Agency (EPA).
The concerns echo some of the objections raised by oil majors ExxonMobil and Chevron, as well as independent green diesel producers, including Diamond Green Diesel, in their comments to the EPA.
US biofuel producers generate tradable credits known as RINs that oil refiners that do not make renewable fuel typically buy to comply with their blending obligations under the Renewable Fuel Standard.
Under an EPA June proposal, renewable diesel made from imported ingredients will be granted only half the credits given to biofuel produced from domestic feedstocks. The measure, aimed at boosting production of biofuels made from domestic feedstocks, is expected to restrict imports of raw materials such as waste oil and beef tallow.
The alignment between crude refiners and China on the US biofuel policy underscores the industry’s growing reliance on used cooking oil imports in the past few years, with the Asian nation emerging as the top supplier.
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Most big oil refiners “have built renewable diesel facilities that were designed for waterborne feedstock imports”, said Bloomberg Intelligence analyst Brett Gibbs. “They don’t want to now have this artificial barrier that forces these plants to try and buy domestic feedstocks that are primarily sent via rail and truck, which puts them at a disadvantage relative to some of the inland players.”
The EPA’s push to reduce the number of credits generated for imported feedstock-based fuels has been supported by farmer and crop processor lobbies, including the National Oilseed Processors Association. The move is expected to boost domestic demand for soybean oil at a time when farmers are struggling with the impact of tariffs on exports.
Still, the plan is poised to “compress the profit margins of the supply chain” and potentially force “some small and medium-sized enterprises in the US to withdraw”, Jiao Yang, deputy director general of a Chinese agency that deals with global trade issues, said in the Aug 8 letter to the EPA.
The EPA is expected to make a final decision on blending obligations and its biofuel credit policy for 2026 and 2027 by the end of October. BLOOMBERG
