Trump Faces Dilemma as US Oil Reels From Record Biofuels Targets

The Obama administration signed its final plan for renewable fuel use in the United States last week, leaving an oil industry reeling from the most aggressive biofuel targets yet as president-elect Donald Trump takes over.

The Renewable Fuel Standard  program, signed into law by President George W. Bush, is one of the country's most controversial energy policies. It requires energy firms to blend ethanol and biodiesel into gasoline and diesel, Reuters reported.

The policy was designed to cut greenhouse gas emissions, reduce US reliance on oil imports and boost rural economies that provide the crops for biofuels.

It has pitted two of Trump's support bases against each other: Big Oil and Big Corn. The farming sector has lobbied hard for the maximum biofuel volumes laid out in the law to be blended into gasoline motor fuels, while the oil industry argues that the program creates additional costs.

Balancing oil and farm interests is likely to prove a challenge for Trump, who has promised to curtail regulations on the oil industry but is already being reminded by biofuels advocates of the importance of the program to the American Midwest, where he received strong support from voters on Nov. 8.

Oil groups are renewing their calls to change or repeal the program following Wednesday's announcement, when the Environmental Protection Agency set record mandates for renewable fuels for the first time hitting levels targeted by Congress nearly a decade ago.

The EPA plan is "completely detached from market realities and confirms once again that Congress must take immediate action to remedy this broken program," said Chet Thompson, President of the American Fuel and Petrochemical Manufacturers, in a statement.

It is unclear what Trump's plans for the program will be and his transition team did not respond to Reuters' requests for comment.

The installation of climate change skeptic Myron Ebell as head of the transition at the EPA bolstered oil industry confidence Trump will swing their way. In September, Trump appeared to briefly echo the views of his supporter, billionaire Carl Icahn, who expressed concern about the program.

Icahn, who owns a stake in an oil refiner, renewed those criticisms last week, saying the ethanol credit market generated by the program is susceptible to manipulation and harming independent refiners.