The incoming Trump administration holds significant implications for the biofuels industry. According to biofuels analyst Scott Irwin of the University of Illinois, if it repeats the pattern of the president-elect's first term, it is likely to be unfriendly. There is a possibility of liberal approvals for waivers exempting small refiners from the Renewable Fuel Standard (RFS), along with efforts to reduce the ethanol mandate.

Refiners' Potential Resurgence

During a farmdoc daily webinar, Irwin stated, "We should assume refiners will be back in the driver's seat." It is expected to be a challenging and unpredictable journey in determining how this will ultimately affect biofuels. As such, it is crucial to be prepared and adapt.

Impact on Corn Ethanol in the First Trump Administration

In 2020, during the first Trump administration, corn ethanol use declined to 12.5 billion gallons. The EPA issued numerous small refinery exemptions under Trump. Farm-state lawmakers repeatedly appealed to President Trump to intervene with the EPA regarding the treatment of renewable fuels. This shows the significant influence of the administration on the biofuels sector.

Nomination of Lee Zeldin and His Potential Impact

This time, Trump has selected former Rep. Lee Zeldin of New York as his nominee for EPA administrator. During his four terms in the House, Zeldin sponsored bills to eliminate the RFS and block ethanol blends in gasoline exceeding 10%. If confirmed by the Senate, one of his early tasks will be setting the RFS for 2026–28. The Biden administration issued a three-year RFS "set" in 2022 but delayed the next set until December 2025, contrary to legal requirements. The 2025 RFS calls for using 15 billion gallons of corn ethanol and 7.4 billion gallons of cleaner-burning "advanced" biofuels.

The Role of Biofuels in Trump's Energy Independence Goal

The biofuel industry emphasizes that ethanol, derived from domestic grain, aligns with Trump's goal of energy independence. However, without policy incentives, there is no market for these fuels. The RFS is the most crucial factor in determining demand, along with the rules for the new 45Z clean-fuel tax credits and the potential impact of trade wars on fuel feedstock imports.

Uncertainty and Outlook

University of Illinois professor Irwin concluded, "I wish I could be more certain in outlook, but policy markets... are most uncertain when policy is highly uncertain." This highlights the complexity and unpredictability of the situation. It is essential to closely monitor the developments and adapt strategies accordingly.