US refiners rack up $ 1.6 billion shortfall in biofuel credits, as Biden administration assesses RFS volume cuts • Farm Policy News


At the end of last week, Reuters Editors Jarrett Renshaw and Stephanie Kelly reported that, “U.S. merchant refiners have accumulated up to $ 1.6 billion in credits they will need to comply with U.S. biofuels laws, according to a Reuters review of corporate information, an apparent bet that Biden administration could let them get away with it or that the prices of credit fall.

“The great responsibility among companies, including PBF Energy Inc, CVR Energy Inc, Par Pacific Holdings and Delta Airlines, comes as the administration of President Joe Biden considering granting petroleum refiners a waiver of their biofuel mandates amid skyrocketing credit costs and economic turmoil caused by the coronavirus pandemic that has hit the fuel industry.

“Refiners feel like they need to do something right now,” said Robert Campbell, head of petroleum product research at Energy Aspects, referring to the decision of some companies to run a credit deficit. of biofuel. “They feel that the point of obligation is extremely difficult for them. “

McConnell, Michael, Olga Liefert and Tom Capehart, Feed Outlook, FDS-21f, US Department of Agriculture, Economic Research Service, June 14, 2021.

The Reuters article noted that, “As part of the US Renewable Fuel Standard program, refiners must mixed billions of gallons of biofuels like ethanol in their fuel or buy compliance credits, called RINs, of those who do. Merchant refiners have long opposed this policy because of its cost. “

Refiners could avoid part of the unpaid debts if the Biden administration chooses to reduce or give up US mandates, as some lawmakers and representatives of the refining industry have asked to help the industry. The Biden administration hasn’t said yet what steps, if any, will need to be taken to relieve refiners of RFS obligations, ”the Reuters report said.

Also last week, Bloomberg Writers Jennifer A Dlouhy and Kim Chipman reported that “the Biden administration is develop targets for biofuels which are likely to be relatively flat or even lower because it seeks to balance the interests of refining blue collar workers and push forward a clean energy agenda.

“The Environmental Protection Agency is about to propose renewable fuel requirements within weeks, according to several people familiar with the strategy who asked not to be named before an official announcement.

The targets will dictate how much corn-based ethanol, biodiesel, and other renewable fuels oil refiners must blend into their products in 2021 and 2022.

“The proposal is on track for publication after Supreme Court makes what could be a crucial decision on the EPA’s ability to exempt refineries from the warrants.

The Bloomberg article pointed out that, “Oil refiners meet government biofuel quotas either by mixed the renewable fuels themselves, or by buying credits from others who have. Prices for some of those credits have hit all-time highs this year as the Biden administration would impose more ambitious quotas and stop exempting refineries from them. Corn and soybean prices also rose above expectations more demand from biofuel manufacturers.

In place, the EPA is considering more modest targets as part of the Renewable Fuel Standard program, according to three people familiar with the matter who asked not to be identified describing internal deliberations. The agency is also preparing to abandon a plan to incorporate the canceled quotas that had been adopted under former President Donald Trump. “

And DTN writer Todd Neeley reported Wednesday that “with reports, the Biden administration may consider relieving petroleum refiners of their renewable fuels standard obligations, a group of Democratic lawmakers pushed back on Wednesday in a letter To EPA Administrator Michael Regan and Brian Deese, director of the National Economic Council.

“In recent days, the media have indicated that the Biden administration maybe considering a number of measures including reduction of RFS volumes for 2020 and 2021, as good as provide further assistance to oil refiners. Despite the efforts reported by the administration, the price of renewable identification numbers, or RINs, has fallen in recent days. The obligated parties of the RFS can either blend biofuels or purchase RIN credits, which are generated by companies that blend biofuels.

“In the letter, 16 members of Congress urged the administration to stick to its decarbonisation program for the transport fuels sector by expanding the biofuel mix. “

Mr. Neeley added that “RFS struggles in the biofuels industry span across multiple jurisdictions. More recently, the trump administration granted 88 waivers for small refineries in four years, triggering a legal fight up to the Supreme Court. Industry groups have placed their hope in the Biden administration for set a different course on the RFS. “

Meanwhile, Reuters Editor Stéphanie Kelly reported last week that, “US Department of Agriculture (USDA) to Grant $ 700 Million in Aid to Biofuel Producers as part of a program to help industries recover from the financial devastation of the coronavirus pandemic, officials said on Tuesday.

“Biofuel groups had pleaded for relief after the pandemic reduced fuel demand and lowered consumption of biofuels like ethanol. USDA said it plans to implement the aid within the next 60 days. “

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