Exclusive: Biden Considers Giving Refiners Relief from U.S. Biofuel Laws, Sources Say

June 11, 2021

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by Jarrett Renshaw nd Stephanie Kelly (Reuters) President Joe Biden’s administration, under pressure from labor unions and U.S. senators including from his home state of Delaware, is considering ways to provide relief to U.S. oil refiners from biofuel blending mandates, three sources familiar with the matter said.

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It could prompt an about-face for the administration, which had been rolling back former President Donald Trump’s dramatic expansion of waivers for U.S. refiners from the Renewable Fuel Standard.

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The credits, known as RINs, are currently at their highest price in the program’s 13-year history, and refiners have said the policy threatens to bankrupt fuel makers already slammed by sinking demand during the pandemic.

Biofuel advocates counter that fuel makers should have invested in biofuel blending facilities years ago and can pass through added costs for buying credits.

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Democratic senators Chris Coons and Tom Carper of Delaware have held at least two discussions in recent weeks with Michael Regan, head of the U.S. Environmental Protection Agency, to discuss providing relief for refiners, according to the three sources.

Coons and Carper were seeking to help the state’s lone refinery, a plant in Delaware City with a capacity of about 180,000 barrels per day.

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In the meetings, Regan and the senators discussed options like a nationwide general waiver exempting the refining industry from some obligations, lowering the amount of renewable fuel refiners must blend in the future, creating a price cap on compliance credits, and issuing an emergency declaration, two of the sources said.

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Merchant refiners like PBF Energy, which operates the Delaware City plant, say biofuel laws could shut down plants and kill thousands of union jobs.

D6 RINs prices reach $2/RIN even as small refineries hold off buying (S&P Global Platts)

Biden’s Big Corn battle (Reuters)

UPDATE 2-U.S. RENEWABLE FUEL CREDITS, GASOLINE MARGINS FALL AFTER REUTERS REPORT (Reuters/Successful Farming)

RFA on Delaware biofuel waiver rumors (RFD TV; includes VIDEO)

Why Commodity Prices Sank on News Biden Administration is Reviewing Relief for Oil Refiners (AgWeb; includes VIDEO)

Why All This Breast-Beating about Faltering Petroleum Refineries? Wouldn’t It Be Better if They Stop Producing Fossil Fuels and Move to Renewables? (Advanced Biofuels USA)

Excerpt from S&P Global Platts: Small refineries hope for relief from US Supreme Court ... In January 2020, the 10th Circuit Court of Appeals ruled that refiners could only qualify for an extension of an exemption granted at the beginning of the RFS, an interpretation that would severely limit the number of exemptions the EPA could grant.Refiner HollyFrontier appealed the decision and the case was argued before the Supreme Court on April 27 and the market continues to await word from the high court.

With the coronavirus pandemic pressuring refining margins, some small refineries have elected to put a hold on buying RINs to meet their 2019 and 2020 RFS mandates to try to hold onto cash and given the uncertainty surrounding not only the Supreme Court decision but also the EPA's delay in providing a renewable volume obligation for 2021.

The higher RINs have driven compliance costs to record highs as well. The Platts Renewable Volume Obligation was 23.3351 cents/gal on June 10, up from 23.1996 cents/gal on June 9, though down modestly from its all-time high of 23.4193 cents/gal on June 8. Refiners and fuel traders watch the RVO – a value calculated using daily RIN prices and biofuel mandates – for per-gallon compliance costs.

The EPA issues a RIN to track renewable fuel usage throughout the supply chain. Refiners and importers -- called "obligated parties" – use them to show the EPA that they have fulfilled their mandated government use of renewable fuels. If the obligated party has not used enough physical product, it can buy RINs to satisfy the quota. READ MORE

Excerpt from Reuters/Successful Farming: The news caused renewable fuel (D6) credits <RIN-D6-US> for 2021 to fall 15% from the previous session. Immediately following the news, credits fell to trade at $1.70 each on Friday, down from $2.00 each on Thursday, traders said. Credits later steadied at $1.85. READ MORE