The EPA, Environmental Protection Agency, will issue a recommendation to the United States Government for it to lower its biofuel blending mandates below 2020 levels; Reuters reported, according to sources familiar with the matter.
Firstly, the EPA is looking to align mandates with actual production levels; which have slumped during the coronavirus pandemic. The mandates determine the amount of biofuels that oil refiners must blend into their fuel mix.
Secondly, such mandates are under the Renewable Fuel Standard, which establishes billions of gallons of biofuels that need to be blended on the overall mix of refiners. As we reported previously, such levels of blend are costly for refiners, and it has been subject of debate.
Thirdly, the Renewable Fuel Standard gives the option that, if refiners do not blend the biofuels themselves, they can purchase tradable credits, known as RINs, from those refiners that do blend. Refiners can also apply for exemptions to the mandates if they can prove the obligations would do them financial harm.
Moreover, such exceptions have been specially debated, as they are considered a harmful measure for the ethanol and corn supply chain and demand. During the Trump administration those waivers quadrupled, as we have reported previously. The waivers under the Trump era also included a 20 years plus period of exemption, which angered farmers and ethanol producing groups.
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EPA already delayed half a year with 2021 blending mandates
In fact, back in June, Lawmakers from the Democratic party stood against Renewable Fuel standard waivers; they sent a letter to the EPA urging it to reject any action that would exempt refiners from their obligations with the RFS. Both U.S. Senate and the House of Representatives signed the letter, including senators from Iowa, Illinois and Minnesota.
In addition, the letter came after the rumor that President Biden was considering ways to provide relief to U.S. oil refiners from the mandates; as his administration is enduring pressure from labor unions and U.S. senators; including from his home state of Delaware.
Furthermore, the letter said. “We support your efforts to address climate change; but we are concerned that rolling back the RFS obligation for refiners directly contradicts this work. Following through on the actions reportedly under discussion would directly undermine your commitment to address climate change; and therefore, the efforts to restore integrity to the RFS; consequently, we urge you to reject them.”
Finally, mandates for the amount of biofuels to be blended for 2021 are already delayed by more than half a year because of the coronavirus pandemic.
