Under instruction from American President Donald Trump, the Environmental Protection Agency (EPA) has been developing a plan to reform the multi-billion-dollar biofuel market to help the oil refining industry, which had long complained that speculation was driving up costs for the credits they must acquire to comply with the nation’s biofuel law. President Trump had requested the EPA’s reform to be finalized prior to June 1, to coincide with expanded sales of gasoline blended with higher levels of corn-based ethanol, intended to help farmers by expanding the market for corn.
Regulators concluded many of the agency’s initial ideas required more time to study, therefore the EPA will release a more limited version of its proposed biofuel credit market reform before the end of this month; it is unclear whether this will limit the intended benefits to refiners. After the EPA finalizes the abridged version of the plan, to coincide with E15 in time for the summer driving season, it will then “continue to consider the existing comments on the other (reform proposals)” according to an EPA source. The less ambitious version of the plan will also focus on increasing market transparency and limiting hoarding of purchase credit (RINs).
The US Renewable Fuel Standard requires refineries to blend biofuels into their gasoline and diesel each year or purchase credits, called RINs, from those who do. The policy has created a 15 billion gallon-a-year market for corn-based ethanol to help farmers but refiners have increasingly complained that compliance costs them a fortune, particularly when RIN prices are high and volatile. Drafted in March, the EPA’s initial plan to reform the RIN market would have barred trading by non-industry players, publicized large positions, improved price transparency, imposed limits on credit “hoarding,” and provided the EPA with increased market-monitoring powers.
Regarding a less ambitious version would be unveiled that focuses on increasing market transparency and limiting hoarding of RINs, EPA spokesman Michael Abboud would not comment but said the agency was adhering to President Trump’s request that it address problems in the RIN market. “The premise of this story is inaccurate. EPA’s final action, which will be signed by the summer driving season, is consistent with the President’s direction last year and will help increase transparency and prevent price manipulation in the RIN market,” Mr. Abboud said.