Refinery-state Democrats plan bill to rein in biofuel blending compliance costs

Source: By Jeremy Beaman, Washington Examiner • Posted: Monday, December 5, 2022

Congressional lawmakers are drawing up legislation to cut down the near-record compliance costs associated with the Renewable Fuel Standard, which has pitted corn staters and some in the oil industry against each other for more than a decade.

The bicameral effort would seek to control the volatile prices of Renewable Identification Numbers, according to an announcement Friday from the office of Sen. Bob Casey (D-PA). Refiners must blend a specified amount of biofuels, to which RINs are attached, into their fuel products in a given year. They may also purchase RINs as credits in lieu of blending the volumes, a common strategy especially among small refiners.

Small refiners in particular have been lobbying for government intervention in the RIN market, with credits flirting for nearly two years with record levels set back in 2011.

Under the legislative proposal, the Environmental Protection Agency would be directed to issue renewable fuel credits at a lower, fixed cost for compliance with the conventional renewable fuel requirement to create a “government backstop-RIN.”

Casey, along with Sen. Chris Coons (D-DE), Rep. Mary Gay Scanlon (D-PA), Rep. Brendan Boyle (D-PA), and Rep. Donald Norcross (D-NJ) are collaborating on the bill.

Pennsylvania, Delaware, and New Jersey are home to the Monroe Energy Refinery, the Delaware City Refinery, and Paulsboro Refining Company, which are all merchant refineries.

Merchant refineries are distinguished from those operated by large, vertically integrated firms such as ExxonMobil and Chevron.

The announcement follows the EPA’s release on Thursday of its proposed renewable fuel blending requirements for years 2023-2025, which would raise the volume of ethanol and other biofuels to new highs.

The proposed 2023 renewable volume obligation is 20.82 billion gallons, an increase from 2022’s finalized volume of 20.63 billion gallons.

RVOs would then grow to 21.87 billion gallons in 2024 and 22.68 billion gallons in 2025, according to the proposal, which is set to be finalized next summer.