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EPA Changed Biofuel Credit Rules before Court Allowed It

Ethanol plant

The Environmental Protection Agency relaxed rules for refiners under the Renewable Fuel Standard at its own discretion before a court ruled in favor of such a relaxation, Reuters reports citing documents that have not been released before as well as a government source.

According to the documents and the source, the rule change came into effect at least four months before a court ruling that the Trump administration cites to the corn industry as basis for its move to relax the rules that saved refineries hundreds of millions of dollars. This, according to Reuters’ source, was the purpose of the early change as well.

The revelation will likely cause anger in the corn industry, which has been pushing for the opposite of what the refining lobby wants, that is, requirements for more ethanol in fuel. The issue has basically put the administration between a rock and a hard place as the interests of the oil and the corn lobbies are at irreconcilable odds.

The EPA finalized the Renewable Fuel Standard, which is part of the 2007 Energy Independence and Security Act, in 2016. Under the terms of the standard, all refiners are obligated to blend their gasoline with ethanol, but smaller facilities can win an exemption if they can prove that blending gasoline with ethanol would harm them financially. Indeed, refiners have spent billions on compliance with the standard, so it’s not surprising that ever since its entry into effect, refiners and corn producers have been pushing for their respective interests and they have been getting results.

The early rule change revealed by Reuters is the latest example of this. It followed a requirement set out by the EPA in the then brand new Renewable Fuel Standard that 15 billion gallons of ethanol be produced in 2017 alone. Although short of an earlier annual production requirement, the 2016 one was praised by the corn industry. For reference, one bushel of corn produces around 2.8 gallons of ethanol. 

By Irina Slav for Oilprice.com

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