The Environmental Protection Agency has granted 31 small refinery exemptions from the 2018 Renewable Fuel Standard compliance year, a move that immediately angered the biofuel industry.
The announcement exempts an estimated 1.43 billion gallons of renewable fuel, second only to the 1.8 billion gallons exempted in 2017 according to EPA’s SRE dashboard. The agency also announced six applications were denied and an additional application was withdrawn or declared ineligible.
As has been EPA’s practice with SREs, the agency did not disclose the recipients. The agency has previously cited confidential business information concerns as its rationale for not publicly releasing the names of the waived facilities.
Under the Clean Air Act, small refiners producing less than 75,000 barrels per day can apply for a waiver if complying with the RFS would cause the facility disproportionate economic hardship. Some facilities that reportedly received waivers were owned by industry giants like Exxon Mobil.
Geoff Cooper, president and CEO of the Renewable Fuels Association, called the decisions “unfathomable and utterly reprehensible.”
“There is absolutely no evidence whatsoever that small refineries are suffering ‘disproportionate economic harm’ due to the RFS, meaning the entire EPA decision-making process is a sham,” he said.
In fact, says Growth Energy CEO Emily Skor, the economic harm falls on the side of the biofuel sector.
“These exemptions are destroying demand for homegrown energy at a time when family farms are struggling, farm income is plummeting and many ethanol plants have been forced to close their doors or idle production,” she said. “The impact on rural communities cannot be overstated.”
According to an industry source, prices for Renewable Identification Numbers — the credits tracking compliance with the RFS — dropped by about half immediately after news of the decisions began swirling. Prices for D6 RINs — the RINs for renewable fuels like corn ethanol — dropped from about 20 cents per credit to 11 cents. Lower prices could be reported when transactions are reported on Monday.
In a message to Agri-Pulse, a source said “2018 vintage D6 RINs are about to be worthless, so all the refiners are dumping theirs.”
Biofuel supporters were optimistic that a June visit to Iowa had brought the attention to President Donald Trump’s mind and could lead to a change in how the administration addressed the waivers. After National Corn Growers Association Vice President Kevin Ross raised concern about SREs during Trump’s speech to celebrate regulatory action to allow year-round E15 sales, Trump reportedly ordered EPA to reexamine the issue.
“Meetings took place … conversations were had … but that’s really all we heard,” American Coalition for Ethanol CEO Brian Jennings told Agri-Pulse. “The message that rural America has been trying to send to the Trump administration about the damage that these small refinery exemptions do has not broken through.”
But for the oil industry, the waivers are a huge boost. Exempting a facility from RFS compliance relieves a major potential cost to the facility.
“Capital planning is difficult without knowing whether your refinery needs to set aside millions of dollars for RIN purchases," said LeAnn Johnson with the Small Refiners Coalition.
The Fueling American Jobs Coalition — a group representing of small refinery workers among other stakeholders — calls the waivers “absolutely necessary to ensure that the RFS avoids punitively damaging our country’s critical refining sector.”
“SREs provide a critical safety valve for the country’s most vulnerable refineries, and are essential to implementing the RFS in a balanced manner that supports U.S. biofuel production while protecting American refining jobs and consumer fuel supplies,” the coalition said.
The waiver authority was a little-known part of the law before taking center stage in the biofuels policy debate in recent years. A court case ruled the Obama administration was being too stingy in awarding the waivers, a ruling frequently cited by the oil industry in defending EPA’s issuing of the waivers. Ag and biofuel groups say the agency has overcorrected in its granting of SREs.
“President Trump must move quickly if there is any hope of repairing the damage,” Skor said. “If he won’t hold the EPA accountable, then he’s failing to uphold the commitment he’s made to rural America.”
Rep. Cheri Bustos, D-Ill., called the waivers "another blow to the pocketbook for farm communities across the Midwest. Time and again, this administration has gone behind closed doors to rig the system for big oil and undermine the Renewable Fuel Standard."
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