Biden Administration Under Pressure to Reduce RFS Blending Mandates
The Biden Administration is considering relief for refiners from volumetric blending mandates under the RFS standard. The Administration is under significant pressure to provide relief from labor union leaders and Senators from his home state of Delaware.
The EPA is currently considering whether to keep RFS blending obligations flat, opt for a modest increase or to delay compliance deadline for 2021 blending mandates as was done in 2019 and 2020. Labor leaders are pressing for an ethanol blending waiver in response to requests from governors, mayors and others to take immediate action to prevent higher prices at the pump.
In a letter to the President, labor union leaders requested urgent action to “reduce the skyrocketing cost” of biofuel blending credits (RINs) “and preserve American union jobs.” According to union leaders, the cost for U.S. refiners to pay for RINs to meet annual blending mandates, particularly ethanol credits, siphons off money for refinery upgrade projects that typically employ thousands of union workers. RIN prices hit a high of $2.00 this week. Democratic senators Chris Coons and Tom Carper of Delaware met with EPA Administrator Michael Regan to discuss broad relief for refiners.
The senators proposed options including a nationwide general waiver exempting the refining industry from specific obligations, lowering annual blending mandates, and creating a price cap on RINs credits.
Meanwhile, Congressional members representing Mid-west corn farmers, including Senator Amy Klobuchar weighed in on the issue, urging Regan to reject any proposal that would exempt oil refiners from their blending obligations.
Complicating matters, the U.S. Supreme Court is set to rule on the legality of the many small refinery waivers issued under the Trump Administration. That decision could effectively eliminate the small refinery waiver as a tool for reducing RFS blending mandates.