U.S. refining trade group pushes EPA to change biofuels program

Image: A biodiesel vehicle is seen at Dogpatch Biofuels filling station in San Francisco, California January 8, 2015. REUTERS/Robert Galbraith

By Ayesha Rascoe

WASHINGTON (Reuters) – An oil refining group on Thursday asked the U.S. Environmental Protection Agency to change the way it enforces the country’s biofuel mandate, stepping up pressure on the agency to alter the program.

The American Fuel and Petrochemical Manufacturers (AFPM) filed a petition urging the EPA to move the responsibility for complying with the Renewable Fuel Standard (RFS) further downstream in the refining and distribution process.

“This is an administrative petition that we’re filing to try to make the program better until Congress can step in and do what really needs to be done and that is repeal the program,” AFPM President Chet Thompson told Reuters.

Thompson called the petition a “reasonable step” that would make the program “far more equitable.”

AFPM and other oil and gas groups have long been opposed to the RFS, which sets the amounts of biofuels such as ethanol that must be blended into U.S. gasoline and diesel supplies annually.

They argue the mandates are costly for refiners and do not reflect actual gasoline demand, which has not risen as fast as lawmakers originally envisioned.

The RFS, which is managed by the EPA, currently requires oil refiners and importers to show they are blending ethanol and other renewable fuels with gasoline and diesel.

AFPM is asking that EPA make the owners of fuel at loading racks responsible for showing the mandated biofuels were blended.

AFPM’s petition follows a similar request filed by Valero Energy Corp in June.

Oil refiners and importers are required to prove compliance with the renewable fuel mandate by either blending biofuels or buying paper credits, known as RINs, from companies that are in compliance.

Companies like fuel retailers, which blend fuels, benefit from selling RINs to obligated parties. Their profits from RIN sales could soar this year as prices of the credits have jumped to highs not seen since 2013 on supply worries due to more ambitious targets for biofuels.

EPA has repeatedly indicated that it would consider changing the obligated parties if it became clear the RIN market was not functioning as it should, Thompson said.

“The cost of RINs today is over a dollar, it’s pretty clear that the RIN market is not working,” he said. “We’re calling EPA out on its own promise, to reconsider it when the time was right.”