The Biden administration sought to thread the needle between warring interests in oil and renewable fuels on Tuesday by proposing modest quotas for the use of plant-based fuels while moving to block exemptions for dozens of oil refineries.
The U.S. Environmental Protection Agency called on Tuesday to retroactively reduce biofuel blending quotas for 2020, while setting targets for this year that track actual consumption as well as a modest increase in 2022.
In a sign that the Biden administration is trying to minimize disruption to the agriculture and petroleum industries, the EPA is also proposing to reject offers from dozens of small refineries for 2019-2021 quota waivers under the US Renewable Fuel Standard program. . Meanwhile, the US Department of Agriculture to provide up to $ 700 million in aid to biofuel producers affected by the Covid-19 pandemic, and the EPA is proposing regulatory changes that could significantly increase the production of new generation biofuels processed in several facilities. .
“This package of actions will allow us to put the RFS program back into growth mode by setting ambitious levels for 2022 and by strengthening the basis of the program so that it is anchored in science and law,” said the administrator of EPA Michael S. Regan in an emailed statement.
The biofuel needs come as President Joe Biden battles gasoline prices which are now hovering around a seven-year high and inflationary pressures that threaten to undermine the U.S. economic recovery. The move follows months of deliberations on how to set targets amid declining fuel demand caused by a pandemic and rising costs, while encouraging greater use of corn-based biofuels. and soy.
The measure responds to concerns expressed by oil refiners and their allies on Capitol Hill, who had argued that the cuts were essential to deal with lower fuel sales and offset 2020 targets which they said exceeded. mixing capacity. The EPA has previously said it is proposing to delay deadlines for refiners to prove they have met quotas for 2020 and 2021.
For 2020, the EPA is taking the unusual step of retroactively revising the total renewable fuel quota to 17.13 billion gallons, from a target of 20.09 billion gallons set in December 2019. Up to 12.5 billion gallons gallons could be achieved with conventional renewables. fuels, such as corn-based ethanol.
Tradable biofuel compliance credits that refiners use to prove they have met their quotas can be used over two years. A reduction in 2020 quotas could prevent refiners from aggressively tapping into a stock of previously generated credits to meet targets they deemed too high.
The proposal, which, if finalized, would set the highest biofuel quota ever reached in 2022, is an attempt to “rebuild the foundations of the program” to support long-term growth, the Deputy Senior Deputy Administrator said. from the EPA, Joe Goffman.
“The level of ambition that we are proposing for 2022 and that we foresee for the future requires that we do everything possible to stabilize the program and stabilize a market which was under enormous pressure due to a pandemic and uncertainty. total on what the 2021 bonds would be, ”Goffman said.
For the current year, the overall goal would be 18.52 billion gallons. The agency is proposing a modest increase for 2022 with 20.77 billion gallons required.
The proposed increase for next year will do little to appease renewable fuels advocates, who have warned the Biden administration that the cuts could “destroy a decade of progress on low-carbon biofuels” and violate Biden’s campaign pledges to support the mandate.
Oil refiners have criticized the move and said it would increase costs for consumers while not providing environmental benefits.
“Too bad for the Biden administration, which is worried about rising energy costs,” said Chet Thompson, executive director of the trade association of US fuel and petrochemical manufacturers. “This proposal would unnecessarily increase already record RFS compliance costs, which, in turn, would increase the cost of producing gasoline and diesel for US consumers – and this without a corresponding environmental benefit or increased biofuel blending. “
Under the 16-year-old Federal Renewable Fuels Standard, fuel importers and refiners must either blend biofuels themselves or purchase tradable credits that track consumption of the plant-based alternatives. The cost of these credits, known as revolving identification numbers or RINs, has shifted sharply this year.
RINs that track ethanol consumption have tripled in value since early November, when Biden took over the presidency, through early June. Since then, credits have fallen by more than half from an all-time high amid speculation the new administration may not be as biofuel friendly as initially expected.
RINs rose 0.6% to 91 cents after falling 11% previously. They have fallen from historic highs reached earlier this year over fears that the Biden administration’s proposals will not be favorable to green fuel makers as originally planned.
Tradable RINs tied to biodiesel rules also rose on Tuesday, rising 0.7% to $ 1.38.
Pennsylvania Congressional Democrats have argued that high RIN prices are particularly hurting some independent refiners, which do not have their own blending facilities to generate credits. These refiners were spending more on RIN purchases than other operational costs, lawmakers said.
The administration is also taking steps that could speed up production of advanced next-generation biofuels by allowing RIN credits to go to more products. Under the proposed changes, biofuels that are processed at two locations – such as bio-oils from wood residue or other feedstocks generated at one facility and then later transformed into finished fuel at another site – would qualify. .
