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EPA grants 31 Renewable Fuel Standard waivers: Update

Prices for US renewable fuel blending credits plunged today ahead of the Environmental Protection Agency's (EPA) approval of 31 exemptions for small refineries of their federal biofuel obligations for 2018.

The agency rejected six of the 2018 applications and the single remaining applications for the 2016 and 2017 compliance years. The decisions marked the first rejected requests to waive Renewable Fuel Standard (RFS) requirements under President Donald Trump's administration and since 2016.

A final 2018 application was withdrawn.

The decisions effectively waived 7.4pc of the requirements for the 2018 compliance year, freeing up credits needed to comply for future years of the program. Farm and biofuels groups immediately condemned the announcement, which arrived three weeks late and followed a heated summer of debate over EPA's administration of the mandates.

Prices for ethanol-associated renewable identification numbers (RINs) traded as low as 11¢/RIN this afternoon ahead of the statement, down from a 20¢/RIN settle yesterday, based on Argus assessments.

"The EPA has proven beyond any doubt that it does not care about following the law, American jobs, or even the president's promises," ethanol trade group Growth Energy chief executive Emily Skor said. "Now farmers and biofuel producers are paying the price."

RFS requires that refiners, importers and certain other companies each year ensure minimum volumes of renewables enter the gasoline and diesel they add to the US transportation fuel supply. Refiners prove annual compliance with renewable identification numbers (RINs) representing each ethanol-equivalent gallon of blended fuel acquired through their blending businesses or by purchasing the credits from others.

Congress included an exemption for refineries processing less than 75,000 b/d of crude a year that could demonstrate a hardship under the program to the Energy department and EPA. EPA issued relatively few such waivers under former president Barack Obama's administration, but their use surged under Trump's first EPA administrator, Scott Pruitt, and following a series of judicial rebukes of the difficult Obama administration criteria.

These waivers effectively reduce total annual mandates because the EPA does not shift the waived requirements to other, larger obligated parties. A record 35 waivers issued as of March this year for 2017 reduced obligations for that compliance year by 9.4pc.

Exemptions for the 2018 compliance year waived 1.43bn RINs.

Ethanol advocates have especially railed against the waivers, insisting the exemptions slashed demand for their fuel and associated corn feedstock as Trump's trade wars and widespread flooding crush farm incomes this year. The waivers have more directly affected biodiesel blending refiners historically used to make up the difference between the total volume of annual ethanol demand and mandated renewable blending volumes.

Refiners have argued that the courts determined EPA was only now properly issuing waivers.

"Capital planning is difficult without knowing whether your refinery needs to set aside millions of dollars for RIN purchases," the Small Refiners Coalition said. "The decision to grant small refinery hardship is a legal decision, not a political one, and we are pleased that [the department of Agriculture's] influence did not cause EPA to depart from the rule of law."

EPA pledged to "remove regulatory burdens" for new pathways of renewable fuels to use to comply with the program, and touted work with the National Corn Growers Association to expedite approval for the herbicide atrazine.

"EPA is committed to an expeditious and transparent process to ensure that America's corn growers have the tools they need to grow safe, healthy and abundant food for all Americans and a growing population," the agency said.

Litigation continues against EPA's handling of the program. The US Court of Appeals has scheduled a late October hearing on an Advanced Biofuels Association challenge to the agency's use of the program.

News No: 5874
Date: 2019/08/12 - 21:35
News Source: Argus Media

EPA  Renewable Fuel  biofuel  Environmental  US 

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