EPA expects rolling release of biofuel waivers: Update

Source: By Argus Media • Posted: Thursday, April 4, 2019

Decisions on federal waivers stoking uncertainty for the biofuels and refining industries may trickle out over the coming weeks, Environmental Protection Agency (EPA) administrator Andrew Wheeler said today.

Exemptions from the Renewable Fuel Standard (RFS) for small refineries have sharply reduced obligations under the annual blending mandate program and helped to limit prices for credits fuel importers and refiners use to prove compliance with the law.

EPA expected a record 39 applications for those waivers for 2018 obligations as of late March. The agency had not yet received recommendations on the applications from the Department of Energy, Wheeler told the US House of Representatives Appropriations committee today.

“We are expecting those any day now, probably within the next couple of weeks,” Wheeler said.

Competing work on the program could further delay decisions on individual waivers, he said. The same EPA staff was responsible for a proposal to expand the sale of 15pc ethanol blends of gasoline, called E15, and changes to the market used to trade those credits, he said.

“There are five or six competing priorities,” Wheeler said. “If we get all 39 on one day, it may be hard to process all of them on one day, but will do it on a rolling basis.”

RFS requires that refiners, importers and other companies each year ensure minimum volumes of renewables blend into the gasoline and diesel they add to the US transportation fuel supply. Companies prove compliance by gathering renewable identification numbers (RINs) representing each ethanol-equivalent gallon of renewable fuel blended into the US supply. Obligated parties that do not physically blend fuel purchase RINs from others.

Congress included a waiver for refineries processing less than 75,000 b/d of crude a year and demonstrating that the program created a hardship recognized by the energy department and EPA. Because EPA has not passed these obligations on to other companies, the waivers effectively slash obligations for a given year. The current administration dramatically increased the number of refineries receiving these exemptions, waiving enough RINs to represent up to 9.4pc of obligations for 2017.

Uncertainty over the effective minimum blending limit for any given year has helped to depress RIN prices. The cost to comply with the program averaged 3.31¢/USG in the first quarter, down by more than half from the same period last year, based on Argus assessments.

The sharp uptick in waivers under President Donald Trump has angered biofuels supporters that see the agency reversing a program that was intended to increase every year. Refiners insist the EPA has finally applied the exemptions as required by statute and court decisions.

The agency treats information on individual waiver recipients as business confidential, and in past years offered only greatly delayed annual summaries of waived obligations. EPA under Wheeler now offers more regular updates about the waivers, including the number of applications and the number accepted for given compliance years. But the halting disclosures and approvals still roil the credit market. EPA continues to review one refinery application to waive 2016 requirements and another refinery application to waive 2017 requirements, the agency said.