EPA Nears Key Decision on Biofuel Waivers for Oil Refiners
[Stay on top of transportation news: .]
The U.S. government proposed a major increase in biofuels mandates earlier this year that would benefit farmers at the expense of oil refiners. Now the Trump administration is set to issue a second policy decision that could again shake up the renewable fuels market.
The Environmental Protection Agency could rule as soon as this week on dozens of pending petitions from small oil refineries seeking exemptions from ethanol- and biodiesel-blending obligations from recent years, according to a person with direct knowledge of the matter who asked not to be named before a public announcement.
The decision, expected to include some waiver approvals, was foreshadowed in court filings Aug. 19. In status updates filed with a federal appeals court, the U.S. Justice Department said the EPA “has now developed a new approach for reviewing small refinery exemptions and that EPA’s current intention is to issue decisions on the small refinery exemptions before it.”
Those decisions will encompass requested waivers now subject to litigation, including those sought by Wynnewood Refining Co. and Calumet Shreveport Refining, the government said.
Spokespeople for the EPA did not immediately respond to requests for comment.
The move could impact biofuel demand and trigger swings in the price of the compliance credits some refiners rely on to meet federal targets.
The decision comes at a time when the recently aligned interests of some farming and fossil-fuel lobbies on biofuel policy are coming apart — testing Trump’s loyalty to two key sectors of his political base. It follows an ambitious proposal unveiled by the EPA in June that would mandate oil refiners blend a record amount of biofuels into gasoline and diesel in 2026 and 2027.
READ MORE:Iowa Biodiesel Retailers Get Large Share of $1.12M Grants
For farmers and crop processors, making sure more corn ethanol and vegetable oils are blended into transportation fuels has become critical as they weather low prices and the impact of tariffs on trade. For some refiners, the blending obligation comes as a costly burden they have struggled to afford.
Under the U.S. biofuel program, the EPA sets annual targets for how much biofuel must be blended into the gasoline and diesel that Americans use. Each gallon of ethanol or biodiesel produced generates credits — so-called renewable identification numbers, or RINs — that oil refiners can buy to meet their federal blending obligations. Under federal law, small refineries can be given waivers if they demonstrate “disproportionate economic hardship.”
Nils Jaeger of Volvo Autonomous Solutions says self-driving trucks will complement the industry’s workforce as freight demand grows. Tune in above or by going to .
But exemption requests have piled up in recent years as a result of court rulings, political pressure and shifting policies under both the Trump and Biden administrations. The EPA currently has a backlog of 195 exemption applications from companies including Delek U.S. Holdings Inc. going back to 2016.
The EPA’s upcoming ruling on pending small refinery exemptions — the first under the new Trump administration — is expected to set a precedent for future years, particularly after a June Supreme Court decision narrowed the grounds for challenging the agency’s actions in court, according to Bloomberg Intelligence analyst Brett Gibbs.
“The EPA now has the cleanest path forward on deciding small refinery exemption petitions,” Gibbs said in an interview.
Almost one-fifth of the pending exemption requests apply to obligations for 2024 and 2025, which refineries still have until December and March, respectively, to meet.
Want more news? Listen to today's daily briefing above or go here for more info
Biofuel producers say that if many of those waivers are approved — without the exempted quotas being reallocated to other refiners — it could reduce overall demand for their product and push down the price of credits in the next several months. If fewer exemptions than expected are granted, RIN prices would likely climb to encourage more biofuel to be mixed into the nation’s fuel supply and help refiners to meet the blending mandate.
The market appears to be pricing in around 20 exemptions per year — equivalent to about 900 million gallons of ethanol — according to Gibbs. That would allow biofuel producers to continue operating at current rates until early 2026, he said.
It’s less clear how the agency will handle exemptions for years in which the compliance period has already ended and which account for most of requests.
