Exclusive-US EPA expected to issue biofuel blending volumes for 2022 below proposed number

© Reuters. FILE PHOTO: A sign advertising E15, a gasoline with 15 percent of ethanol, is seen at a gas station in Clive, Iowa, United States, May 17, 2015. REUTERS/Jim Young

By Stephanie Kelly and Jarrett Renshaw

NEW YORK (Reuters) - The U.S. Environmental Protection Agency is expected to issue on Friday biofuel blending mandates for the year 2022 that are lower than a number proposed in December, and mandates for the year 2021 that are above the proposed number, according to two sources familiar with discussions.

The EPA is expected to set 2022 volume mandates at 20.63 billion gallons and retroactive volume mandates for 2021 at 18.84 billion gallons, the sources said. The EPA is also expected to deny pending petitions from small refiners asking to be exempted from the blending mandates, but allow a longer deadline for oil refiners to prove compliance with the law, the sources said.

Retroactive volume mandates for 2020 are expected at 17.13 billion gallons, in line with a proposed number from December, the sources said.

The volume mandates, typically set ahead of time each year, were delayed due to the fallout of the coronavirus pandemic, which severely reduced U.S. energy demand.

The EPA did not comment on the figures, but said that the agency would announce several actions on Friday that would provide a path for sustained growth of renewable fuels.

"Together, these actions reflect the Biden Administration's commitment to reset and strengthen the RFS, bolster our nation's energy security, and support homegrown biofuel alternatives to oil for transportation fuel," said EPA spokesperson Tim Carroll.

The decision on the mandates has involved White House staff, who have had to weigh how the policy could affect record-high gasoline prices, surging food costs and inflation, and Farm Belt constituents. Higher mandates can raise demand for corn and impose costs on fuel producers.

Under the U.S. Renewable Fuel Standard (RFS), oil refiners must blend billions of gallons of biofuels into the nation's fuel pool, or buy credits from those that do. The credits, known as RINs, are used by oil refiners and importers to show compliance with mandates.

Small refiners can receive an exemption from the requirements if they can prove financial harm from the mandates.

The law has been a hotbed of controversy, typically pitting the powerful oil and corn lobbies against each other.