Grassley releases analysis to argue biofuel credits not to blame for PES bankruptcy

Source: By HELENA BOTTEMILLER EVICH and ERIC WOLFF, Politico • Posted: Wednesday, February 7, 2018

Sen. Chuck Grassley is pictured. | John Shinkle/POLITICO

Sen. Chuck Grassley said he asked his staff to look into what role the RFS may have played in the bankruptcy because he was concerned about job losses. | John Shinkle/POLITICO

 Sen. Chuck Grassley says he has found no evidence that the Renewable Fuel Standard contributed to the recent bankruptcy of Philadelphia Energy Solutions, the largest oil refinery on the East Coast.

The Iowa Republican on Tuesday released his staff’s own analysis, finding that the company’s bankruptcy filing cannot be blamed on the RFS. On a call with reporters, Grassley said the company had a long history of financial troubles. He cited Philadelphia Energy’s poor management decisions and a lack of investment in blending infrastructure, among other factors.

RFS sets annual requirements for how much ethanol and other biofuels must be blended into the nation’s fuel supply. Refiners must acquire biofuel credits, called Renewable Identification Numbers, or RINs, and submit them to the EPA to prove compliance.

These credits can be sold on the open market, and their prices can vary significantly. Some refiners own the infrastructure to blend their own fuel, and thus acquire credits directly, but others, like Valero and PES, must purchase credits to prove compliance. These companies say the cost of RINs is hurting their bottom lines, while EPA and analysts say they make it up when they sell their refined product.

Grassley said he asked his staff to look into what role the RFS may have played in the bankruptcy because he was concerned about job losses. The internal staff memo found that the RFS and the cost of RINs “have very little to do with the success of refineries and were not a significant factor in the PES bankruptcy,” he said.

“The RFS cynics are at it again, but their arguments are once again coming up empty,” Grassley added.

PES CEO Greg Gatta has said that without the program, the company would be “competitive with anyone in the world.”

A small group of independent refiners led by Valero have found a sympathetic voice in EPA Administrator Scott Pruitt, who last week said the PES bankruptcy was a signal that the program’s compliance system of biofuel credits should be reviewed. Pruitt has also butted heads with farm-state senators over how much renewable fuel should be required.

Pruitt offered several proposals last year that would have cut RIN prices, but he was rebuffed by the White House and pushed into reversing himself by corn-state senators.

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