Refiners say making them the obligated party for fuel blending is “misguided”

Independent refiners are asking the Environmental Protection Agency (EPA) to shift responsibility for complying with biofuel programs from refiners to fuel blenders. Delta Airlines’ (ticker: DAL) Monroe Energy LLC, Carlyle Group’s (ticker: CG) Philadelphia Energy Solutions, Valero Energy Corp (ticker: VLO) and Ronald E Minsk, who recently served as a special assistant to President Obama, are among those asking for the change, reports Reuters.

The refiners argue that it should not be their responsible to blend biofuels or to buy compliance credits from companies that have done so, because not all oil refiners have blending capacity. The group asked the EPA to make fuel blenders responsible for meeting this portion of the Renewable Fuel Standard (RFS).

Minks said that blenders have little incentive to blend greater volumes because they are not responsible to show compliance. Valero said the change would promote both availability and lower retail prices.

Resetting sights on the RFS

In June, the EPA lowered the renewable fuels goals for 2015 and 2016 from those set by Congress to better reflect historical averages and realistically view potential future growth. The RFS covers standards for cellulosic biofuel, like ethanol, biomass-based diesel and advanced biofuels.epa-fuelstandard

For 2015, total proposed RFS requirements are now 16.3 billion gallons versus 20.5 billion gallons in the statutory requirement set by Congress. For 2016, the EPA lowered the proposed RFS requirements to 17.4 billion gallons from 22.25 billion gallons. The EPA also proposed 1.90 billion gallons of biomass-based diesel for 2017.

The EPA’s proposed targets for renewable fuels were revised down from those set by Congress in the Clean Air Act, saying that, “due to constraints in the fuel market to accommodate increasing volumes of ethanol, along with limits on the availability of non-ethanol renewable fuels, the volume targets specified by Congress … cannot be achieved.”

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