The window for public input on reforms to the nation’s biofuel policy has closed, giving the Environmental Protection Agency a limited window of time to finalize changes before a June 1 deadline.
The changes — allowing the summer sale of E15 and tweaking the biofuel mandate credit system — have been hotly debated for years, leaving little confusion about where the various stakeholders stand on the broader points.
“A lot of people have been very vocal about this for some time, so there probably won’t be that many surprises in the final formal comments that are submitted,” Growth Energy CEO Emily Skor told Agri-Pulse. She said the group has tried to be consistent in its prior conversations with EPA so “they can anticipate what it is that we’ll be filing.”
That level of consistency — something others will undoubtedly share in their submissions — could also speed up the finalization, Skor said. But that doesn’t mean the language is without its complexities.
The proposed language to reform the Renewable Identification Numbers (RINs) market is rife with issues, according to both oil and biofuel groups. Both Skor and Frank Macchiarola with the American Petroleum Institute pointed out a lack of EPA justification for the moves.
“We recognize that there’s volatility in the marketplace, but volatility is not problematic in and of itself,” Macchiarola told reporters last week. “In general,” he said, the RIN market status quo works for API.
But merchant refiners beg to differ. They say the cost of Renewable Fuel Standard compliance weighs heavy on their operations. In general, there are two ways to demonstrate that compliance: blend biofuels into gasoline or diesel to generate a RIN certificate, or purchase RINs from an integrated facility with certificates to spare. Merchant refiners typically fall in the latter category, which they say leaves them at the mercy of unpredictable market fluctuations.
PBF Energy, a merchant refiner with five refineries in its portfolio, said the RIN market is “currently rife with manipulation” and “wild volatility.”
“Extensive volatility across most RIN categories — often resulting in hundreds of percent swings over very short intervals — that occurs in periods of time when there is no significant impending regulatory action or market event provides even more proof of uneconomic, manipulative trading,” the company notes in its comments.
Those refiners also have enlisted the expertise of Susan Ervin, a former Commodity Futures Trading Commission senior counsel who acted as a consultant for Valero to study the RINs market. In a letter to EPA Administrator Andrew Wheeler, she said RINs are generally “five to ten times more volatile than similar energy commodities such as oil, ethanol, and natural gas futures.”
While the RIN proposals have proved to be a battleground of their own, a provision of the E15 language has also popped up as a potential red flag on the biofuels side.
Currently, blender pumps mix together E85 and E10 to produce E15, but technical language in the proposal would add a litany of additional compliance complexities for blender pumps and blur the area between fuel retailer and fuel manufacturer for stations using the pumps.
In their comments, the Renewable Fuels Association and Growth Energy call on EPA to instead adopt 2016 regulatory language. Then, RFA notes EPA “correctly recognized that the existing regulatory regime for a ‘fuel manufacturer,’ which was promulgated before the rise in blender pumps, is unwieldy and outdated as applied to blender pumps.”
Speaking to reporters Tuesday morning, Sen. Chuck Grassley, R-Iowa, said that language had the potential to negate many of the gains the ethanol industry might experience from EPA approving the E15 waiver.
“It’s going to cut about 50 percent of the potential use of ethanol out,” Grassley said. “Just think how ridiculous it is — now I want to say, very, very ridiculous — to say that a filling station that has a blender pump is a blender. Now that’s just stupid. That doesn’t meet the common sense test.
“There’s surely gotta be people in EPA that are smarter than that. It’s just ridiculous. That’s got to come out,” he added.
EPA has until June 1 to finalize the regulation if it plans to allow E15 to be sold this summer. Last week, Macchiarola confirmed that such an action would be met with a legal challenge, but an injunction would have to be granted to stop the sale of the fuel if EPA wraps up its regulatory process in time.
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