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Five oil-refining states ask US EPA to waive biofuel mandate amid plunging fuel demand


Louisiana, Texas, Oklahoma, Utah, Wyoming seek waivers

Biofuel makers say oil refiners trying to 'steal' markets

RFA says blending obligations adjust to falling demand

Washington — The governors of five oil-refining states have asked the US Environmental Protection Agency to waive biofuel blending mandates while refiners confront plunging fuel demand as a result of the coronavirus pandemic.

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The governors of Louisiana, Texas, Oklahoma, Utah and Wyoming said refiners in their states need hardship waivers to the Renewable Fuel Standard to weather the financial turmoil.

"The current [blending obligations] made assumptions regarding the ability of the US refining sector to blend renewable fuels that simply no longer obtain," the governors said in the letter. "As our country comes to grips with this national emergency, continuing to implement the current [mandate] imposes an added obligation that would 'severely' harm the sector, and consequently harm the economy of the states and the nation."

An EPA spokeswoman said the agency was "reviewing the letter and watching the situation closely."

The 43 states with stay-at-home orders as of Thursday account for 95% of US gasoline demand, according to Energy Information Administration data.

EIA expects US liquid fuel demand to plunge 3.24 million b/d in the second quarter of 2020 to 17.07 million b/d, with gasoline demand hitting levels not seen since the 1960s.


The 2020 biofuel mandate requires US refiners to blend 20.09 billion gallons of renewable fuel into gasoline and diesel this year, making up 10.97% of the nation's transportation fuel supply.

S&P Global Platts assessed D6 ethanol RINs for 2020 compliance at 37.75 cents/RIN and 2019 credits at 28 cents/RIN Thursday, unchanged day on day.

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.

The Renewable Fuels Association, a biofuel trade group, said the governors' request ignores the fact that the blending mandate is set as a percentage of gasoline and diesel supplied -- meaning it adjusts to lower demand.

"So, if COVID-19 causes 2020 gasoline and diesel demand to drop 15%, for example, the renewable fuel blending requirements drops by the exact same amount," said RFA President Geoff Cooper.

"In any event, the EPA has no authority to grant relief when the RFS itself is not the cause of the 'severe economic harm,' a fact that has been reconfirmed by EPA multiple times in the past when it denied similar nonsensical waiver requests. The governors themselves acknowledge the problems facing refiners today are driven by COVID-19 and cratering oil prices, not the RFS."


Cooper said the same factors are hurting the ethanol industry "to an even greater extent," as nearly half of US ethanol production capacity has been idled because of falling gasoline demand.

"A general waiver at this point would only serve to close more ethanol plants and kill more jobs across rural America," he said.

Biofuel group Growth Energy said the oil refiners were trying to "steal markets from struggling biofuel producers and farmers."

"We've seen the courts reject this kind of abuse before," Growth Energy CEO Emily Skor said in a statement. "Even oil companies admit that biofuel credits don't impose a real cost on refiners. We see this as a non-starter and call on this administration to focus on restoring - not destroying - rural jobs."