Pruitt looks to stamp out RIN “hoarding,” raises possibility of limits on Wall Street
Source: By James Osborne, Houston Chronicle • Posted: Tuesday, March 13, 2018
WASHINGTON – EPA chief Scott Pruitt raised the idea Monday of limiting Wall Street’s ability to trade the government-issued credits for ethanol and other biofuels in an effort to aid oil refineries.
Under federal law, refiners must blend their gasoline with up to 10 percent ethanol. Refiners that don’t blend ethanol themselves must buy the credits from companies that do. But these refining companies claim that the market for credits is opaque, thinly traded and subject to manipulation by speculators that can send price skyrocketing.
In a meeting with reporters at the Environmental Protection Agency’s headquarters in Washington, Pruitt seemed to suggest that removing speculators from the market would help keep costs lower.
“There’s some things on the trading platform I think should happen no matter what,” he said. “There seems to be a hoarding of [Renewable Identification Numbers], which inflates the price of RINs. Some have talked about limiting the participants who buy and sell, so you can get away from some of the speculation that’s taking place.”
Scott Pruitt, the head of the Environmental Protection Agency said on Monday he will sign a new rule to get rid of the Clean Power Plan. The war on coal is over. The Clean Power Plan was an effort from the Obama administration to limit emissions from coal-powered power plants.
The Trump administration is trying to broker a deal between oil state Republicans like Sen. Ted Cruz, of Texas and corn state Republicans like Sen. Chuck Grassley, of Iowa, who have been at odds for months over the the future of the federal mandate requiring ethanol be blended into the nation’s fuel supply.
In addition to limiting RIN trading, Pruitt also brought up the possibility of lifting an air pollution regulation that prevents the sale of fuels with higher concentrations of ethanol during the summertime.
“I told the folks in Iowa, if the law allows me to do it I’ll sign it tomorrow. It doesn’t make sense to only be able to sell nine months out of the year.”
Pruitt’s seemingly off-the-cuff comments Monday drew applause from ethanol producers, which by virtue of their large demand for the region’s corn supply carry considerable political weight.
“We are encouraged by the Administrator’s comments,” said Bob Dinneen, president of the Renewable Fuels Association. “We would be receptive to any proposals bringing more transparency and liquidity to the RIN market.”
Cruz has asked the Trump administration place a cap on the price of RIN credits, to help refineries the senator argues are at financial risk from compliance costs that can run hundreds of millions of dollars a year. That proposal has drawn fire from Grassley and other Midwestern politicians who argue Cruz is trying to decimate ethanol demand by reducing financial incentives for refineries to comply with the federal mandate.
Pruitt didn’t discuss the cap proposal during Monday’s meeting but rather focused the need to find a solution that would help refineries while also giving ethanol producers a boost.
“These market challenges we have are real,” he said. “The President has a commitment to the [biofuels mandate] and ranching and farming communities in this country. But he doesn’t want refineries to shut down either.”