Washington — A bipartisan group of 13 US senators from farm states urged the Trump administration Tuesday to stop granting small refiners waivers to the US biofuel mandate, arguing the flurry of exemptions is undermining the policy and could distort fuel markets.
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The Environmental Protection Agency has granted "roughly 25" hardship waivers to the Renewable Fuel Standard for 2017 compliance, out of 29 applications received so far, a spokeswoman said Tuesday.
The senators, led by Republican Chuck Grassley of Iowa and Democrat Amy Klobuchar of Minnesota, said in a letter to EPA Administrator Scott Pruitt that the waivers slash demand for biofuels and feedstocks, and "could cripple the market for years to come."
"These waivers fall well outside the bounds of the letter or spirit of this provision in the law, which sought to provide flexibility for the smallest of US refiners, and only in cases of genuine hardship," the senators said.
"Worse, EPA's actions are already hurting biofuel producers and farmers across the United States at a time when farm income is at the lowest levels since 2006 and retaliatory trade measures from China threaten to deepen the crisis."
The biofuel mandate allows EPA to grant hardship waivers to plants that process less than 75,000 b/d of crude. The agency said it will grant a waiver if it determines "that compliance with RFS obligations will impose 'disproportionate economic hardship' on the refinery in the year for which exemption is requested."
The agency has accelerated its use of the waivers under Pruitt, leading farm-state senators and biofuel groups to accuse him of finding a backdoor way to undermine the RFS.
EPA has released few details about the process, other than to say that it consults with the Department of Energy on the applicants' crude throughputs.
Ethanol Renewable Identification Numbers sank to 32.25 cents/RIN April 4 on reports of major refiner Andeavor securing waivers to the biofuel mandate for three of its small plants. The assessment was the lowest since September 2015.
S&P Global Platts assessed D6 ethanol RINs for 2018 compliance at 37 cents/RIN Tuesday.
D6 RINs have plunged 48% since the start of the year.
Grassley has estimated the small-refinery waivers could erase 1.2 billion gal/year of ethanol demand that refiners would have otherwise blended under the 15 billion gal/year conventional ethanol mandate.
Neelesh Nerurkar, a biofuels analyst for ClearView Energy Partners, estimates that 2016 blending volumes excused by small-refinery exemptions may have grown to at least 761 million gallons.
Oil analyst Phil Verleger said in a note Sunday that the waivers could cut US ethanol demand by as much as 100,000 b/d, which would, in turn, boost crude demand.
As discontent surrounding the waivers grew among pro-biofuel senators, President Donald Trump said last week he might allow year-round sales of E15, or gasoline blended with 15% ethanol. Biofuel supporters have been pushing for the waiver of gasoline volatility rules to allow higher ethanol blends to be sold in the summer months.
ClearView's Nerurkar estimates the E15 waiver could increase demand for the fuel to 800 million gal/year in the short term, compared with a 2018 projection of E15 sales at 570 million gal/year absent a waiver.
--Meghan Gordon, firstname.lastname@example.org
--Edited by Valarie Jackson, email@example.com