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Biofuel makers surge as EPA to propose blending requirements this week

Green Plains (NASDAQ:GPRE) surged into the close, finishing +5.8% in Wednesday's trading on reports that the Biden administration is preparing to increase the amount of renewable fuel that oil refiners must blend into their gasoline and diesel for 2023 and beyond, Bloomberg reported.

Other makers of renewable fuels rallying late include Gevo (NASDAQ:GEVO) +7.9%, Aemetis (AMTX) +14.3%, Amyris (AMRS) +8.1% and FutureFuel (FF) +5%.

Refining companies potentially affected by the release include Valero (VLO), PBF Energy (PBF), Marathon Petroleum (MPC), Phillips 66 (PSX) and CVR Energy (CVI).

Archer Daniels Midland (NYSE:ADM), one of the three largest publicly traded producers of fuel-grade ethanol in the U.S. along with Green Plains and Valero, closed +1.1%.

The U.S. Environmental Protection Agency, which has expanded authority for the first time to set obligations, is expected to issue its long-awaited proposal by the end of this week.

According to Bloomberg, the EPA will ask companies to blend 20.82B gallons of renewable fuel into their diesel and gasoline next year, with as much as 15B gallons coming from conventional corn-based ethanol.

The proposal also will call for overall blending mandates of 21.87B gallons in 2024 and 22.68B gallons in 2025.

Advanced biofuel blending volume mandates in the EPA proposal will be set at 5.82B gallons in 2023, 6.62B gallons in 2024 and 7.43B gallons in 2025.

Separately, the American Petroleum Institute said for the first time it would endorse legislation to allow year-round sales of E15 ethanol gasoline, Argus reports, lending its support to one of the biofuel industry's top priorities.

Green Plains (GPRE) is "today's best nearby cap-gain ethanol buy," Peter Way writes in an analysis published recently on Seeking Alpha.