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Feature: Ethanol RINs Rebound as Prospects Fade of Quick RFS Reform
by Meghan Gordon and Wes Swift (Platts) RINs bottom out March 2 after four-month slide; EPA may hold 2018 mandate steady, start easing in 2019; Point of obligation debate fades into background -- Refiners' and petroleum marketers' hopes for a quick rollback of the US ethanol mandate by the Trump administration have fizzled out, causing renewable fuel credits to rebound after four months of steep drops.
Since President Donald Trump started shaping his cabinet in early December, traders have pounced on any shred of news hinting how he might handle the Renewable Fuel Standard -- with many of them interpreting each development as a sign the biofuels
mandate would be gutted.
But now Washington policy watchers see those chances as overblown, with the RFS nowhere near the top of the administration's priorities and given the need for Congress to take action to alter the policy in any significant way.
Irwin said RINs volatility in recent months reflected Trump's mixed messages on biofuels so far.
"Trump is a friend of ethanol who hired Pruitt and Icahn," he said. "The market is having a hard time understanding how Trump can send such contradictory signals." Rob Underwood, president of the Petroleum Marketers Association of America, thinks RFS reform is still in the cards. But it remains to be seen whether it will come from Congress passing a comprehensive rewrite -- which he thinks will be harder -- or EPA using its waiver authority to lower the annual volume mandates.
Representative John Shimkus, Republican-Illinois, for example, continues to remind stakeholders that EPA will assume full control of the RFS program in 2022 barring new legislation, spokesman Jordan Haverly said.
"He believes that uncertainty should help bring all sides of this debate to the table...and his ultimate goal is freeing up the market, getting away from the mandate and letting competition fill the void," Haverly said.
For his part, Pruitt has neither expressed support for biofuels nor repeated his pre-nomination distaste for the RFS since taking the top job at EPA.
Pruitt generally sticks to a tight script that emphasizes the need for EPA to stay within the authority Congress grants it -- which could indicate an unwillingness to make major RFS changes through an agency rulemaking rather than at the direction of new legislation. READ MORE