Oil refiners, unions press U.S. EPA on biofuel blending costs

Oil refining company and labor union representatives pressed the U.S. Environmental Protection Agency at a virtual meeting last week to lower costs of the nation’s biofuel blending program when it resets the policy next year, according to sources familiar with the call.

The refining industry and unions representing its workers have grown more concerned about the impact of an expected overhaul of the Renewable Fuel Standard (RFS). It requires refiners to blend billions of gallons per year of biofuels like ethanol into the nation’s fuel or buy credits called RINs from those that do.

When Congress enacted the RFS in 2005, it set yearly volume requirement targets of renewable fuel through 2022 and gave the EPA broad authority to reshape the policy after that. The EPA is expected to propose changes by mid-September.

In a virtual meeting last week, representatives of PBF Energy Inc and Monroe Energy LLC discussed RINs policy with EPA officials, according to three sources familiar with the matter. Both companies have refineries near or in President Joe Biden’s home state of Delaware.

Two of the sources said refinery representatives asked the EPA for measures that could lower the steep costs of the credits. Small refiners say high RINs costs could put them out of business.

The EPA told the refiners and labor groups, which included the boilermakers and steamfitters, that they need to appeal to lawmakers or officials in the administration for any changes to RINS policy and pricing, two of the sources said. That comment appeared to frustrate the refining and labor representatives, one source said.

All three sources asked not to be named because they were not authorized to publicly discuss details of the call. It was unclear who initiated last week’s meeting.

The EPA said it has met with multiple stakeholders over the last several months to gather input on the upcoming RFS proposal.

“We encourage stakeholders to share their perspectives with us and other parts of the administration to ensure our regulatory decisions are based on the best information possible,” said EPA spokesperson Lindsay Hamilton.

Monroe and PBF did not immediately respond to a request for comment.

Biden and his fellow Democrats are feeling heavy pressure for soaring pump prices and rising consumer costs heading into the November midterm elections. The administration has been pressing refiners and oil drillers to quickly ramp up production.

Last month, Biden wrote a letter to executives from Marathon Petroleum Corp, Valero Energy Corp and Exxon Mobil Corp, complaining they had cut back on oil refining to pad profits. Refiners denied the accusation, saying they were producing near full capacity.

They have also complained vocally that the Biden administration has set biofuel blending volumes too high and has been stingy with waivers from the biofuel mandates meant to help small refiners stay afloat.

Fuel producers have been enjoying big profit margins lately thanks to strong demand and tight supply. But the industry has been in long-term decline because of volatile markets, regulatory pressure on fossil fuels, and slow consumption growth. Many refiners have shut down or retooled into biofuel plants in recent years, which has contributed to the current price spike.

EPA has been mum on its plans for the RFS reset. Stakeholders expect the agency to issue multi-year proposals for blending requirements to reduce regulatory uncertainty for refiners and biofuel producers alike.

The agency is also expected to somehow incorporate the electric vehicle industry into the next phase of the RFS, which would help advance Biden’s efforts to reduce greenhouse gas emissions from transportation and fight climate change. Refiners and biofuel producers both oppose that idea.