EPA May Exclude Biofuel Trade Limits From New Gasoline Rules

The Environmental Protection Agency may not include limits on biofuel credit trading in its new draft proposal on gasoline sales, Reuters reports, citing three unnamed sources in the know.

The limits were proposed by the American Petroleum Institute last year as an alternative to lifting a current ban on the sales of E-15 gasoline during driving season. E-15 contains 15 percent of bioethanol, which is higher than the usual 10 percent for other blends. It has been banned during the summer months on worries that it worsens smog.

At the time, the API argued that lifting the ban, which was part of a plan to appease the energy and ethanol lobbies by President Trump, would be unfair to consumers. "This so-called deal does nothing to fix the program ... it makes things worse," the industry body said. "It is giving away the store to the ethanol lobby and giving the consumers the tab."

The problem for the oil industry is that refiners have to blend rising amounts of ethanol in their fuels every year or, alternatively, buy higher-ethanol blends from their competitors. These are the so-called biofuel credits, or Renewable Identification Numbers, that are giving refiners grief with their heightened price volatility in recent years.

"The EPA has been seriously looking at dropping the RIN reform to speed up the process on E15," one of the Reuters sources said. Another said the authority would delay the biofuel credit trading limits reform and focus on E-15 sales for the time being.

Last year, amid ongoing discussions between refiners and the administration regarding the biofuel credit trade, energy industry commentator Robert Rapier noted that oil refiners have spent billions complying with the Renewable Fuel Standard. Valero alone said in 2017 it had splashed more than US$1 billion on compliance. If the EPA now goes with the ethanol industry and against refiners, this disgruntlement will only deepen.

By Irina Slav for Oilprice.com

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