Will EPA Torpedo RFS Again on Wheeler’s Way Out?

With just eight days left in EPA Administrator Andrew Wheeler’s term, president and CEO of the Renewable Fuels Association (RFA) Geoff Cooper told AgriTalk’s host Chip Flory on Tuesday that he’s not surprised by reports that EPA may grant some waivers to oil refiners that would exempt them from requirements to blend biofuels into their fuel mix for the 2019 compliance year.

“I've had some of my members saying, ‘This is just unbelievable.’ And I ask, ‘Is it really?’ Given the Trump administration's track record on the RFS, I think this is completely believable,” Cooper said. “This administration began with EPA trying to torpedo the RFS (Renewable Fuel Standard), and it appears that this administration will end with EPA trying to torpedo the RFS.”

The worst-case scenario right now would be EPA trying to grant all of those exemptions or the lion's share of them, Cooper said. If that happens, the industry expects another 1.5 billion RINs returned to refiners which would flood the RIN market and torpedo prices.

“Despite what you hear from the refiners, that absolutely has an impact on the incentive to blend higher levels of biofuels,” Cooper said. “If you send RIN prices crashing from 80 cents down to 10 cents again, rest assured that has an impact on the movement toward E15. It has an impact on higher blends like E85. When refiners can comply with the RFS by turning in cheap RIN credits instead of blending biofuels, that's what they're going to do.”

Flory said he was surprised to find out the Supreme Court is planning to review the 10th Circuit Court’s decision that said EPA did not have the authority to grant blending waivers to refiners that had not been given exemptions in the previous year. 

This process will likely include another round of briefings, oral arguments and prolonging of the issue for at least another six months, Cooper said.

Optimism in a New Administration
RFA has some hope that the Biden administration could come in and change the policy on small refinery exemptions and only grant exemptions to those small refiners that deserve them and can prove they have had continuously extended exemptions or truly need relief from their compliance obligation.

In the first 30 days of the Biden administration, Cooper said RFA wants some clarity on how the new administration will handle these unresolved issues on the Renewable Fuel Standard

“Administrator Wheeler is leaving the building with lots of balls in the air around the RFS,” he said. “We're hoping to get a game plan from the Biden administration on what they intend to do with the small refinery exemptions, with the 2021 blending requirements that still haven't yet been proposed, and with a court order from 2017 that EPA hasn't yet complied with.”

From day one, the Biden administration will prioritize carbon reduction, he said. RFA recently released an analysis that shows how 12 million metric tons of CO2 can be reduced by denying the 66 small refinery exemptions in question and ensuring these volumes of renewable fuels are used instead of gasoline and diesel. 

“We all know that renewable fuels like ethanol and biodiesel have a much lower carbon profile. Simple actions like denying these exemption requests and restoring that lost volume from 2016 can have a significant impact on reducing emissions. It doesn't require executive orders. They don't need rulemaking. They don't need legislation. It's something that could truly be done on day one,” Cooper said.

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BREAKING: Trump Administration Expected to Grant Some RFS Waivers