Senators press Trump for new refinery waiver

Source: By Marc Heller, E&E News reporter • Posted: Sunday, September 15, 2019

Eight Republican senators urged President Trump yesterday to endorse a new type of biofuel blending waiver for oil refineries, if the administration backs an increase in annual volumes of the alternative fuel.

In a letter to Trump, Sens. Ted Cruz of Texas, Pat Toomey of Pennsylvania and others asked for a conventional biofuel waiver credit that could be issued to refineries if the administration’s new biofuel policies result in higher compliance costs. It would allow refineries to buy renewable fuel credits from the government at a reduced price, with proceeds going to building new biofuel pumps at service stations.

An announcement on biofuel policy tweaks could come any day, and lawmakers on both sides of the debate have asked to meet with Trump first.

The lawmakers’ letter suggests that increasing biofuel volumes — as the White House is considering — could cause prices for renewable fuel credits, formally known as Renewable Identification Numbers, to skyrocket. A new waiver credit would be a “safety valve” against a price spike, they said.

The proposal, which the petroleum industry has discussed for months, would kick in when prices for renewable fuel credits exceed 10 cents per credit.

With the administration already approving higher-ethanol fuel called E15 for year-round sales earlier this year, a new refiners’ credit would offer some balance between the competing industries, the senators said.

“We were encouraged that you were receptive to this idea during meetings at the White House last year,” the senators said. “Now that the ethanol industry has been given E15, a waiver credit would be both a fair deal for both parties and provide a degree of predictability so that American refineries do not have to shutter operations.”

In addition to Cruz and Toomey, senators signing the letter were Jim Inhofe of Oklahoma, James Risch of Idaho, John Barrasso and Mike Enzi of Wyoming, Shelley Moore Capito of West Virginia, and John Kennedy of Louisiana.

The lawmakers pressed Trump to resist policies that would increase biofuel mandates, either by increasing proposed annual volumes for next year or by reallocating to other refineries the volumes of biofuel recently waived through small refinery exemptions.

EPA in August said it would grant exemptions to 31 small refineries that said complying with the renewable fuel standard would cause disproportionate economic hardship. That move sparked an outcry from the ethanol industry and some farm groups, pointing out the economic troubles already facing farmers hit by the administration’s trade war with China.

In some cases, ethanol plants have shuttered operations, although the effect of the exemptions on ethanol demand is a question of hot debate between biofuel and petroleum groups.

EPA and the Energy Department have said they don’t see evidence of the “demand destruction” observed by ethanol groups.

In their letter, the senators said the ethanol industry’s financial problems are caused by a “massive overcapacity problem,” rather than refinery exemptions or the renewable fuel standard.

Requiring biofuel volumes from the exemptions to be reallocated to other refineries would violate the law and harm refiners, nullifying any relief achieved by the exemptions in the first place, they said.