Valero, Long a Critic of Ethanol Law, Joins U.S. Biofuels Group

Source: By Mario Parker, Bloomberg • Posted: Tuesday, November 29, 2016

A subsidiary of Valero Energy Corp., a long-time critic of America’s ethanol mandate, has joined the Renewable Fuels Association, one of the industry’s biggest trade groups.

The move, which was announced in a joint statement Monday, shows how even reluctant fuel producers are positioning themselves to take advantage of growing demand. Last week, the U.S. Environmental Protection Agency issued record 2017 biofuel consumption quotas.

Valero Renewable Fuels Company LLC is a unit of San Antonio, Texas-based Valero, the largest independent U.S. oil refiner and one of the four biggest ethanol producers. The company grew its biofuel business on the back of an industry shakeout that started in October 2008 with the bankruptcy of VeraSun Energy Corp., once the industry’s bellwether. It bought its first mills in 2009.

Still, Valero has historically opposed the so-called Renewable Fuel Standard, the U.S. law that forces refiners to use escalating amounts of ethanol and biodiesel. The company has at times called for its repeal. More recently, its pushed for the government to tweak the program, citing burdensome costs for independent refiners. In June, Valero filed a petition with the Environmental Protection Agency, asking it to move the onus on who is obligated to show compliance with the law.

Bloomberg was first to report Valero’s plan to join the Washington-based trade group.

In response to the EPA’s new quotas, Valero said the agency “missed an important opportunity to fix the implementation” of the program by not moving the point of compliance. Costs associated with the law have drawn criticism from billionaire Carl Icahn, who owns CVR Energy Inc., an independent refiner.

“They still want to see a change in the RFS,” Bob Dinneen, president of the Renewable Fuels Association, said of Valero. There’s still a lot more other common ground, though, particularly with safety efforts and growing global demand, he said.

“We think it’s a signal that the industry’s coming together,” Dinneen said in a telephone interview.