March 28 (Bloomberg) — President Donald Trump’s administration has asked oil and biofuel producers to reach an agreement on the next phase of the nation’s biofuel policy in a bid to avoid the kind of political conflict that characterized his first term in office.

Oil giants and biofuel producers in the agricultural belt are traditional rivals for billions of dollars of U.S. gasoline market share.

They have repeatedly battled over the details of the U.S. Renewable Fuel Standard, which calls for billions of gallons of corn ethanol and other biofuels to be blended into the country’s fuel supply.

Among the most important issues discussed, the U.S. Environmental Protection Agency is preparing a new blending rule under the Renewable Fuel Standard that will govern emissions for the next two to three years, as well as the market for the program’s multibillion-dollar compliance credits.

In Washington, U.S. and Canadian biofuel producers, concerned about the impact on trade of President Donald Trump’s waffling on tariffs, have cut back production to avoid future border problems, Reuters reported. Some analysts expect a “painful” contraction in both biodiesel and renewable diesel production, not only because of the tariffs but also because of the Biden administration’s elimination of subsidies for blended fuels.

The Philippine government’s plan to increase the biodiesel blend in diesel fuel presents a significant opportunity for growth in the biodiesel market. Starting from October 1, the mandated blend will increase from 3% to 4%, with further increases to 5% by October 2026. To meet this rising demand, D&L Industries, through its subsidiary Chemrez Technologies Inc. (CTI), is considering building a second biodiesel plant.

D&L Industries confirmed that it is in the final stages of evaluating the risks and rewards of this expansion. The company has sufficient financial flexibility following the completion of its Batangas plant and expects the new plant’s capital expenditure to be lower. However, any large-scale investment would require shareholder approval. D&L believes that increasing biodiesel production will boost agricultural and manufacturing investment, create jobs, and improve environmental sustainability, while reducing the Philippines’ reliance on imported fossil fuels and enhancing energy security.

The recent proposal to pause the mandatory 90-day blending of biodiesel with fossil diesel is a major setback for Brazil, both economically and environmentally. This measure not only threatens the sustainability of the biodiesel industry but also puts thousands of jobs at risk and impacts the income of family farmers dependent on this production chain.

The biodiesel industry is a vital pillar for job creation and economic growth. In 2022, a survey conducted by the Esalq/USP Applied Economics Research Center (Cepea) and the Brazilian Vegetable Oil Industry Association (Abiove) found that the soybean and biodiesel sectors created 2.05 million jobs, representing 10.8% of total agricultural employment in Brazil. This marks an 80% increase in employment compared to 2012 when the first report in this series was published. Suspending the mandatory blending would directly affect these jobs, leading to widespread unemployment and severe negative impacts on several regional economies.

Additionally, removing biodiesel from fossil diesel would significantly raise greenhouse gas emissions. It is estimated that the suspension could increase carbon dioxide emissions by 4.5 million tons, further intensifying the climate crisis.

Biodiesel prices in Brazil had fallen nearly 7% this year as of early March, according to regulator ANP. Due to a record soybean harvest and a drop in the international price of soybean oil, the main raw material for biofuels, the market expects that prices could go further down.

Experts also point out that the biodiesel blend in Brazilian diesel fuel is currently maintained at 14%. According to the original plan, this proportion should be increased to 15% from the beginning of March, but due to inflationary pressures, the Brazilian government decided not to adjust the blend ratio.

The average price of biodiesel in Brazil has fallen to R$5.797 per liter, reaching its lowest level since the end of October 2024, according to a survey released this week by ANP. This compares with a price that hovered near a nearly three-year high last year.