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U.S. Biofuel Mandate Decision Could Be Delayed By Pandemic

The U.S. Environmental Protection Agency (EPA) may be unable to come up with a decision for next year’s biofuel blending requirements by the November 30 deadline because of the coronavirus pandemic, EPA Administrator Andrew Wheeler said.

The agency has not decided on applications from refiners to be exempt from those blending requirements, either, Wheeler said on a call with reporters, carried by Reuters.

“The COVID response has had a negative impact on both corn growers as well as refiners, and we’re trying to understand what the market is going to be and what we should expect for next year as far as the RVO [Renewable Volume Obligations] is concerned,” EPA’s administrator said. 

The agency is also considering as many as 67 applications from refiners across the United States to be exempted from the obligations to blend biofuels. Typically, refiners able to prove that blending requirements lead to financial hardships are eligible for exemption from the biofuel blending mandate.

Under the Renewable Fuel Standard (RFS), oil refiners are required to blend growing amounts of renewable fuels into gasoline and diesel. Refiners that do not have the infrastructure to blend biofuels must purchase tradeable blending credits known as Renewable Identification Numbers, or RINs.

Refiners are now feeling the pinch not only from the lower fuel demand but also from the surging costs for complying with the biofuel requirements as refining and blending activity is lower than usual.

Because of the slump in demand, blending activity has been lower than what is typical so far this year, and the price of RINs has soared. According to Reuters estimates, the price of corn-based ethanol fuel credits has jumped five-fold so far this year. 

RIN credits had increased even before the pandemic after a U.S. appeals court said in January that the U.S. Environmental Protection Agency (EPA) must review its decision to grant waivers for biofuels to three small refineries. EPA’s grounds to grant those three refiners waivers were flawed, according to the appeals court.  

By Charles Kennedy for Oilprice.com 

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