Trump wants to limit RIN prices to help oil refiners: source

Source: By Marc Heller, E&E News reporter • Posted: Sunday, September 22, 2019

President Trump has told senators he favors limiting prices on biofuel credits to help petroleum refiners, according to an industry source briefed on yesterday’s White House meeting.

Trump’s support for a 10-cent limit on prices of renewable identification numbers — the credits that act as a currency for the renewable fuel standard — could satisfy refiners who oppose his related move to boost the amount of ethanol blended into gasoline. An announcement on those policies could come any day, according to industry groups and lawmakers.

Word of Trump’s support for limiting prices of RINs emerged from a meeting between him and senators from states with significant petroleum refining interests.

“The president stated with great clarity that U.S. policy will be that RIN prices will not exceed 10 cents,” said the industry source, who wasn’t in the room but received accounts from people familiar with the details.

Exactly how the administration would achieve a 10-cent limit on RIN prices remains a topic of discussion, the source said. One idea is to cap prices at that level, but the same result could be achieved by other means such as allowing refiners to buy credits from the government at 10 cents when market prices exceed that level.

The provision on RIN prices, if it came to pass, would be part of a broader package of tweaks to the RFS in response to ethanol groups’ complaints about biofuel blending exemptions the administration recently granted to small refineries. The administration is widely reported to be considering increasing required biofuel volumes next year, as part of a rulemaking process already underway at EPA.

Refiners oppose any increase in biofuel volumes, while ethanol groups say the exemptions have undercut demand for biofuel and contributed to the idling of some biofuel facilities in recent weeks. EPA grants exemptions to refineries that demonstrate they would face economic hardship by meeting the requirements, which often include buying RINs at whatever price the market dictates.

Biofuel advocates oppose limiting RIN prices.

Capping RIN prices would “undermine the purpose of the RFS, weaken the corn and ethanol industries, and threaten jobs in agriculture and manufacturing,” said Ken Colombini, a spokesman for the Renewable Fuels Association, an industry group. He said capping prices would erase any benefit from another provision the administration is weighing: requiring other refineries to take up the biofuel volumes that were waived through the hardship exemptions.

Economists at Iowa State University projected last year that capping RIN prices between 10 cents and 25 cents would reduce consumption by around 700 million gallons, the RFA said.

But the effect of small refinery exemptions on ethanol demand has emerged as a major talking point on both sides. EPA Administrator Andrew Wheeler told the House Science, Space and Technology Committee earlier this week that his agency hasn’t seen ethanol demand fall as a result of the exemptions.

“So far this year, the industry has produced more ethanol than they did at this point last year, and we do not see any demand disruption from the small refiner program on ethanol production,” Wheeler said, responding to questions from Rep. Brian Babin (R-Texas).

Yesterday’s meeting included several senators, including Bill Cassidy (R-La.), who tweeted later that “the president is very engaged on the issue, and feels as if we can work towards a solution which protects jobs.”