The Renewable Fuel Standard (RFS) aims to open up the gasoline market to ethanol. However, small refiners sometimes have trouble paying for additional costs associated with blending biofuels, so they purchase Renewable Identification Numbers (RINs) from other refiners.
Still, the additional cost can cause economic hardship. The Environmental Protection Agency (EPA) tries to assist small refiners by granting them ?hardship waivers,? essentially removing their blending obligation. The waivers are only granted to refiners who produce fewer than 75,000 gallons a day.
A Reuters report claims the Environmental Protection Agency granted ?hardship waivers? to three refineries, owned by Andeavor. An Iowa renewable fuel proponent shares how this impacts the renewable fuels industry and American farmers.
Andeavor, one of the nation?s largest oil refining companies, recently received such waivers for three of its smaller, oil refineries. Iowa Renewable Fuels Association executive director Monte Shaw says EPA Administrator Scott Pruitt is improperly issued the waivers.
?It seems like the EPA wants to handout small refiner exemptions like candy on Halloween. This is ridiculous,? Shaw said. ?These were to be for legitimate hardships for very small refineries, of 75,000 barrels or less a day. We?ve heard Exxon Mobil has a request in. Andeavor, a massive company that made over a billion dollars in profits last year, have one refinery that?s small and somehow they?re saying it?s disproportionately hurt by the RFS. You?re not suppose to just get these; there?s supposed to be a threshold.?
Shaw says granting large refiners waivers comes with serious implications.
?If you start with a 15 billion gallon RFS and cut off the sweetheart deal in the PES bankruptcy, that?s about 300 million gallons. We?re hearing there will be upwards of 500 million gallons cut from these small refinery exemptions that won?t be reallocated. That drops the 15 billion gallon RFS below where we blended last year (14.3 billion gallons),? Shaw said. ?The RFS could be rendered meaningless for corn ethanol by Administrator Pruitt. This is going to have profound impacts on U.S. ethanol demand, corn grind, and corn prices.?
Shaw says if small refineries continue to receive exemption waivers, the EPA should allocate RFS blending requirements to remaining, obligated parties, similar to what was done under the Bush and Obama Administrations.
Shaw reiterates, ?small refiners who have true, disproportionate economic hardships should be granted waivers.? He adds the blending requirements should then be allocated to the remaining, obligated parties, similar to what was done under the Bush and Obama Administrations.
?When small refinery exemptions had been granted, the Bush and Obama Administration were then able to, in the final, annual rule, spread that final rule (RVO) over the remaining refiners,? Shaw said. ?You got an exemption, but the 15 billion was still spread over the remaining refiners. What Pruitt is doing is exempting them after he sets the allocation for everyone else. Every small refiner exemption he grants lowers the 15 billion gallons.?
