EPA Refinery Biofuel Waiver Program Pending Review

President Trump placed a temporary freeze on exemptions for small U.S. oil refineries in financial distress.

December 04, 2018

NEW YORK – The Trump administration placed a halt on exemptions for small oil refineries that could experience financial distress from the U.S. biofuels law. This freeze is allowing the Department of Energy to review its scoring system for applications, a process that then gets funneled to the Environmental Protection Agency (EPA).

The news means that there will likely be changes to the program, which is already a controversial subject among oil and corn industries—especially as the EPA increased the number of waivers and exemptions last year.

The U.S. Renewable Fuels Standard says that “oil refiners must increasingly blend biofuels like corn-based ethanol into their fuel each year or purchase blending credits from those that do.” This regulation was passed in 2005 to help farmers and cut fuel imports.

However, if a small oil refinery can prove compliance causes them disproportionate hardship, they can be exempt. The EPA granted 29 waivers in 2017, up from 14 in 2015 and 20 in 2016.

According to Reuters, credits (or Renewable Identification Numbers known as RINs) have plummeted from over $1 to $0.10 this week as news spread about the number of EPA waivers granted last year. While some exemptions went to large profitable companies like Chevron Corp and Andeavor, others went to refiners that lack enough biofuel blending facilities like Valero Energy Corp and PBF Energy Inc.

NACS has been concerned about the lack of transparency in the small refinery exemption process and met with EPA this fall.  NACS urged EPA to make the waiver process more open and ensure all market participants have the same information at the same time and to better define the criteria used to grant such an exemption.