RIN cap declared dead, export scheme resurfaces at RFS meeting

The latest in a series of politicized, high-level meetings over the Renewable Fuel Standard took place May 8 at the White House where it appears U.S. Senator Ted Cruz’s scheme to cap prices on renewable identification numbers (RINs) has finally fallen flat, while year-round E15 sales will move forward.

“It appears that a harmful and nonsensical cap on RINs has finally been declared dead, and that the EPA will consider ways to reallocate the lost biofuel obligations resulting from the small refiner exemptions,” said Kurt Kovarik, vice president of federal affairs for the National Biodiesel Board.

The meeting was attended by President Donald Trump, U.S. Sens. Joni Ernst, Ted Cruz, Pat Toomey and Chuck Grassley, as well as U.S. EPA Administrator Scott Pruitt and USDA Secretary Sonny Perdue.

“President Trump agreed to allow for the sale E15 year-round,” said U.S. Sen. Chuck Grassley. “There was also an agreement to not pursue an artificial cap on RIN prices, which would have destroyed demand for biofuels and hurt biofuels workers.”

Grassley said he told the president and Pruitt that EPA “hardship” waivers for billionaires are hurting biofuels and undermining the RFS. “They also undercut the president’s commitment to meet the annual 15 billion gallon volume obligation set by Congress under the RFS,” Grassley said. “There was discussion about how to reallocate the waived obligations so that demand for biofuels wouldn’t be hurt. While details weren’t decided, I look forward to reviewing a plan being developed by Secretary Perdue and Administrator Pruitt. Any fix can’t hurt domestic biofuels production.”

The Iowa Renewable Fuels Association said Cruz floated the idea of allowing exported gallons of ethanol to count toward domestic RFS blending requirements. There was no agreement on this export RIN scheme, according to IRFA.

“An RFS export RINs scheme slashes overall ethanol demand by at least 1.4 billion gallons, destroying billions in farm income,” said Monty Shaw, IRFA executive director. “Such a scheme would break President Trump’s promise to voters to uphold the RFS, break Pruitt’s commitment to several senators to not pursue the idea, break the letter of the law that requires gasoline used in the U.S. to contain the applicable volume of renewable fuel, break the U.S.’s World Trade Organization commitments as a clear export incentive, and will reduce overall ethanol production—undercutting the goal of U.S. energy dominance. Ultimately, we need President Trump to fix the demand destruction from unwarranted small refinery exemptions, not agree to yet another demand destruction scheme.”

Kovarik said Cruz’s RIN export scheme would provide another bailout to refiners that have already benefited from more than two dozen questionable “hardship” waivers. “We’ll work to inform the administration of how this idea will harm soybean farmers and biodiesel producers, and is contrary to the president’s ‘America First’ pledge to support America’s farmers, biofuels producers and consumers,” he said.

Ernst said she is still assessing the full implications of the idea to attach RINs to exported ethanol—“an idea Administrator Pruitt committed to not pursue in a letter last October,” she said. “I am pleased that the president did not move forward with a RIN cap that would have destroyed demand, hurting both farmers and biofuel producers. … Additionally, I am encouraged the administration will be taking a closer look at the ‘hardship’ waivers that have been abused by EPA to undermine the RFS.”

Brent Erickson, an executive vice president at the Biotechnology Innovation Organization, said, “EPA has already provided unwarranted waivers to oil refiners that are destroying demand for all biofuels and undercutting industry investments.”

Erickson said the organization remains concerned about the impact counting RINs from exported renewable fuels would have on the development of advanced biofuels.