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.
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

The Biden administration is likely to raise ethanol blending mandates for 2021 above the figure it proposed in December to align with U.S. consumption, according to two sources briefed on the decision.

In December, the U.S. Environmental Protection Agency proposed that refiners blend 13.32 billion gallons of ethanol into the fuel pool, a move that angered farm-belt lawmakers and the industry who said it was too low.

Recent federal figures show U.S. consumption of ethanol at about 13.94 billion gallons.

A final decision has not yet been made, the sources said. The White House and the Environmental Protection Agency, which administers the mandates, did not immediately comment.

Administration officials huddled at the White House on Tuesday to review options for the mandates, which are being set retroactively because of disruptions caused by the fallout of the COVID-19 pandemic, the sources said.

The meeting underscores the political implications of the upcoming decision, which will impact fuel and food prices amid a 40-year high in inflation rates.

Under the U.S. Renewable Fuel Standard (RFS), refiners must blend billions of gallons of biofuels into the nation's fuel pool, or buy tradable credits from those that do.

The rule has long been a point of contention between the powerful oil and corn lobbies. While the mandates have set up a multibillion-gallon market for corn farmers and ethanol producers, merchant refiners claim the requirements are costly and threaten to put them out of business.

The EPA, which administers the RFS, is expected to release a final rule on biofuel blending mandates by Friday. It will cover 2022, as well as the years 2020 and 2021 retroactively.

The administration has not given any indication it plans dramatic changes from its 2020 and 2022 proposals, the sources said.

After the Reuters story on Wednesday, U.S. renewable fuel (D6) credit prices climbed 11% to trade at $1.50 each, traders said.