Reuters’ sources say that under the Trump administration’s soon-to-be-unveiled overhaul of the US Renewable Fuel Standard (RFS), the number of biofuels waivers for small refineries will be cut and ethanol exports could rise. Des Moines Register photo by Rodney White.
Refiners complain costs high for RFS rules compliance
Reuters reports that the Trump administration is expected to reduce the number of biofuels waivers available to small refineries and include ethanol exports in federal biofuels usage quotas as part of the overhaul to the US Renewable Fuel Standard, or RFS rules.
Refiners and the corn industry have been at loggerheads recently over the future of the US RFS, which requires oil refiners to add increasing amounts of biofuels into gasoline and diesel sold in the United States.
The standards have been a boon for corn producers, creating a 15 billion gallon a year market for corn-based ethanol. However, refiners say complying with the law is expensive and the higher cost associated with the program threatens jobs.
According to the Reuters’ sources, the Trump administration is in the “last stages” of formally proposing changes to the biofuels regulations. The sources added the changes will be subject to the federal rule-making process.
Changes to the RFS rules include reducing the number of waivers that the Environmental Protection Agency can issue to smaller refiners. These waivers absolve them from the ethanol-use regulation. The changes also ensure that any unused waivers are available to other refiners.
Currently, the EPA is required by the regulations to give these waivers to refineries that produce less than 75,000 barrels per day (b/d) and can prove that compliance with the regulations would cause “disproportionate economic hardship”.
The EPA has broad discretion over the assessment of the applications and, in recent months, the EPA granted over two dozen waivers to refineries. This is triple the typical amount under the past administrations.
The corn lobby argued that such a move reduced the overall demand for ethanol.
Recent EPA waivers have been issued to refineries owned by companies like CVR Energy, owned by billionaire Trump ally Carl Icahn, and Andeavor, a large and highly profitable refining company.
The Reuters source did not say how much the waiver program would be cut. The source did say that the Trump changes to the RFS rules would not reduce the amount of biofuels blended in a given year. This could be accomplished by redistributing waived blending requirements to other refineries.
Senator Tom Barraso (R) of Wyoming, says he will “oppose any agreement that would make it more difficult for small refineries to obtain hardship relief in the future”. A number of small refineries are located in Wyoming.
The Trump administration is also considering allowing the export of biofuels, including ethanol, to count towards the annual biofuels volume mandates under the RFS. This would cut the amount of fuels refiners would have to blend domestically.
Biofuels groups are opposed to this aspect of the proposal. They argue the move would not increase domestic use of biofuels, which is the intent of the RFS and the decision could spark trade tensions.
Reuters reports the changes would also temporarily lift restrictions on selling E15 gasoline, a higher-ethanol blend, in the summer. This would, in theory, expand the market for biofuels.
Sales of E15 gasoline are now banned in the summer time as there are concerns it could increase smog. The biofuels industry and some scientific studies show that E15 is similar to currently approved blends, smog-wise.
The White House and the EPA did not respond to requests for comment.