UPDATE 2-Trump Biofuel Policy Overhaul to Include Fewer Refinery Waivers - Source

May 14, 2018

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by Jarrett Renshaw and Chris Prentice (Reuters) The Trump administration will scale back the use of biofuels waivers for small refineries and count ethanol exports toward federal biofuels usage quotas as part of a broad overhaul of the nation’s renewable fuel policy, a source briefed on the plans said on Friday.

The changes are aimed at easing tensions between the oil and corn industries, rivals that have been clashing for months over the future of the U.S. Renewable Fuel Standard - a law that requires refiners to add increasing amounts of biofuels into the nation’s gasoline and diesel.

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The changes would be subject to the federal rule-making process, added the source, who was not authorized to speak publicly.

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The biofuels changes include cutting back on the number of waivers that the Environmental Protection Agency can provide to small refiners to free them from the regulation, and to ensure that any waived obligations are redistributed to other refiners.

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In recent months, the EPA has granted more than two dozen such waivers in an effort to help the refining industry cope with the RFS - about triple the typical level under past administrations - angering the corn lobby, which argued the exemptions are reducing overall demand for ethanol.

Reuters has reported that the recent EPA waivers have gone to refineries belonging to companies like the large and highly-profitable Andeavor and to CVR Energy, owned by billionaire Trump ally Carl Icahn.

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Another change will be to allow exports of biofuels like ethanol to count toward the annual biofuels volume mandates under the RFS - which could ease the burden on domestic refiners by reducing the amounts they would have to blend domestically.

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The Trump administration’s tweaks to the RFS would also include temporarily lifting restrictions on selling a certain kind of higher-ethanol blend gasoline in the summer, called E15, according to the source. READ MORE

Ethanol Proponents Praise Year Round Sales of E15 (Iowa Public Television; includes VIDEO)

Ethanol Blog: More White House RFS Details Emerge (DTN The Progressive Farmer)

Grassley ‘going to reserve judgment’ on EPA Administrator (Radio Iowa)

Breaking Down RIN Exports Idea -- Biofuel Groups Laud Year-Round E15 Move, But RINs on Exports Could Nullify Gains (DTN The Progressive Farmer)

Trump biofuel plan to reduce RFS waivers (Biofuels International)

Trump biofuel policy overhaul to include fewer refinery waivers (AutoBlog)

Grassley: Ethanol is a critical piece of America's energy strategy (CNBC)

Addressing Misconceptions From Senator Grassley's Ethanol Editorial (Forbes)

Lifting of E15 ban will help farmers (Grand Island Independent)

Republican senator says EPA chief must slow refinery waivers or resign (Reuters)

Refiners at odds with agriculture secretary over ethanol demand (Houston Chronicle)

Small Refinery Exemption Study: An Investigation into Disproportionate Economic Hardship (March 2011 by the Office of Policy and International Affairs U.S. Department of Energy)

Excerpt from DTN The Progressive Farmer: Irwin said in a tweet on Friday he believes the potential action being taken on small refinery waivers points to an effort to slow down the pace of granting those waivers. It doesn't necessarily mean the agency will go back and rescind waivers already granted.

In the past two years the agency has granted about 40 such waivers, and reportedly received at least another 30 for 2018.

In a tweet Irwin said he interprets the "temporary" aspect of lifting the E15 season ban as a sign the agency continues to be concerned about the legality of granting a permanent waiver.

"I suspect 'temporary' is key for now as that is more doable from a legal standpoint," Irwin tweeted.

"Also proposing to count RINs on ethanol exports for RFS compliance. This is so obviously illegal under the RFS and last summer's appeals court ruling that I can only conclude they thought they had to give something to the refiners.

"I have been skeptical from the outset that so many small refinery exemptions could have been granted in such a short time with the proper paperwork. Making this case according to clear court guidelines is no simple thing. This is one reason I have inferred that EPA and its supporters have been so opposed to transparency on this issue." READ MORE

Excerpt from Office of Policy and International Affairs U.S. Department of Energy: Disproportionate economic hardship for small refineries was characterized by increased cost of compliance to the point that the current or future viability of the refinery is impacted. In the current lower refining margin environment, the cost of RFS2 regulations could have a material effect on small refinery profitability.

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Small refineries can suffer disproportionate economic hardship from compliance with the RFS program if blending renewable fuel into their transportation fuel or purchasing RINs increases their cost of products relative to competitors to the point that they are not viable, either due to loss of market share or lack of working capital to cover the costs of purchasing RINs. READ MORE