U.S. EPA recommends lowering 2020 biofuel mandates retroactively

Agency not confirming or denying sources' statements

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Reuters — The U.S. Environmental Protection Agency has recommended retroactively lowering biofuel blending mandates for 2020, two sources familiar with the matter said, after the agency on Thursday sent a proposal on the mandates to the White House for review.

The move could provide immediate relief to oil refiners that have to comply with the blending requirements. It also is likely to drag the Biden administration further into a clash between oil refiners and the biofuels industry over the requirements.

Under the U.S. Renewable Fuel Standard program, oil refiners must blend billions of gallons of biofuels into the nation’s fuel mix, or buy tradeable credits, known as RINs, from those that do.

Farmers and biofuel producers argue that reducing mandates harms demand for their products, though refiners reject that claim and say the costs of the program puts blue-collar refinery jobs at risk.

The EPA confirmed Thursday it had sent the biofuel blending proposal to the White House’s Office of Management and Budget (OMB).

“The proposal aims to get the (Renewable Fuel Standard) program back on track while addressing challenges stemming from decisions made under the prior administration,” an EPA spokesperson said in a statement.

The agency was also expected to recommend to the White House reducing mandates for 2021, while boosting mandates for 2022 above the previous two years, Reuters reported last week, citing sources.

The agency did not provide details on the proposal or confirm Reuters’ reporting.

Lowering mandates retroactively for 2020 could benefit in particular merchant refiners such as PBF Energy and Delta Air Lines’ Monroe Energy, which slowed or halted purchases of renewable fuel credits this year as they lobbied the Biden administration for regulatory relief.

Those refiners and others had amassed earlier this year a more than US$1 billion shortfall in the credits they need to comply with the mandates, an apparent bet that the Biden administration would let them off the hook or that the credit prices would fall.

The deadline for refiners to prove compliance with the 2020 requirements was extended in April to Jan. 31, 2022. Reducing the mandates would help refiners who have outstanding obligations for that compliance year.

— Reporting for Reuters by Stephanie Kelly and Jarrett Renshaw.

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