US House panel considers transparency rules for EPA’s small refinery waivers

Source: By Meghan Gordon, S&P Global • Posted: Wednesday, October 30, 2019

Washington — A US House of Representatives panel Tuesday considered requiring the Environmental Protection Agency to disclose details of small refineries’ requests for exemption from the federal biofuel mandate.

Biofuel makers urged lawmakers to adopt the transparency rules, while oil refiners argued the disclosures would put small refineries at a competitive disadvantage.

The House Committee on Energy & Commerce’s environment subcommittee heard testimony on the Renewable Fuel Standard Integrity Act of 2019, which would set a June 1 deadline for small refiners to apply for relief from the following year’s biofuel mandate and would require EPA to release details of the applications.

EPA currently discloses the number of exemption petitions it receives and grants, but after the compliance year and without any company names.

Chet Thompson, president of refiner trade group American Fuel & Petrochemical Manufacturers, said during the House hearing that the proposed legislation would effectively stop small refiners from applying for hardship waivers, because the most basic details could put them at a disadvantage to competitors.

“Even a name of a company can hurt you given that all fuel markets are regional — your distress could put you at further distress,” he said.

Geoff Cooper, president of the Renewable Fuels Association, said EPA should disclose the identity, volume and location of plants seeking exemptions.

“Those are three basic things that are not confidential business information and don’t involve financial or operational factors,” he said.

BOTH SIDES WANT RFS CHANGES

The waivers – given to refiners that process less than 75,000 b/d – have become the main point of contention between biofuel makers and oil refiners as both groups push for changes to the Renewable Fuel Standard.

The Trump administration tried to calm anger in farm country over the refinery waivers and broader trade policy by proposing higher ethanol blending volumes for the 2020-21 mandate, but the policy’s fine print inflamed the issue even further.

EPA proposed increasing the 2020 blending mandate by 770 million Renewable Identification Numbers, well below the actual volumes waived on average over the past three years.

RINs are tradable credits EPA issues to track production and use of alternative transportation fuels. For corn-based ethanol, one gallon of ethanol yields one RIN.

Refiners maintain that the waivers have not hurt ethanol demand, production or exports.

S&P Global Platts Analytics estimates that reallocating 770 million RINs before the 2020 compliance year would prevent the loss of about 28,000 b/d of ethanol demand and 15,000 b/d of biomass-based diesel demand.

US ethanol demand is now forecast at 942,000 b/d in 2020, up less than 1% from 936,000 b/d this year, with biomass-based diesel demand at 173,000 b/d in 2020, up 6% from 163,000 b/d this year, according to Platts Analytics.

Platts assessed D6 ethanol RINs at 14.75 cents/RIN Monday, the lowest since August 26 and down 9.25 cents/RIN since October 4 when the EPA announced the deal to boost biofuel blending.

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