Energy

Pruitt Proposes New Standards For Ethanol Regs Costing Oil Companies Millions

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Tim Pearce Energy Reporter

The Environmental Protection Agency (EPA) released proposed new biofuel standards Tuesday, increasing biofuel blending targets in 2019 overall relative to 2018 goals.

The EPA proposed the new targets under the Renewable Fuel Standard (RFS), which mandates biofuels make up a certain percentage of diesel and gasoline fuel mixtures coming out of refineries.

The proposal sets the total amount of biodiesel and ethanol that must be blended into the fuel supply next year at 19.88 billion gallons, an increase of 590 million gallons over 2018 standards.

“I’ve traveled to numerous states and heard firsthand about the importance of the RFS to farmers and local communities across the country,” EPA Administrator Scott Pruitt said in a statement. “Issuing the proposed rule on time meets Congress’s statutory deadlines, which the previous administration failed to do, and provides regulatory certainty to all impacted stakeholders.”

Despite raising the standards, ethanol and biodiesel advocates slammed the EPA proposal and Pruitt for not addressing the agency’s liberal approval of hardship waivers relative to past administrations.

Hardship waivers are granted to some small refineries that produce 75,000 barrels or less of fuel annually. The waivers either partially or fully exempt each refinery from complying with the mandates that can companies hundreds of millions of dollars a year. (RELATED: Pruitt And Perry Butt Heads Over ‘Hardship’ Waivers For Costly Biofuel Regs)

“It would seem a hollow and cynical exercise to praise or thank EPA Administrator Pruitt for appearing to follow the statute with this proposed renewable volume obligation,” Renewable Fuels Association President and CEO Bob Dinneen said in a statement. “It comes with the backdrop of 1.6 billion gallons of demand destructed by illegal waivers to small refineries and no commitment that EPA is changing its approach to granting these exemptions.”

The American Petroleum Institute (API), representing the oil and gas industry, welcomed the announcement but had its own problems with the proposal. The RFS, based on outdated data, is broken and should be repealed, according to API.

“EPA made the right call in not reallocating the waived small refiner exemption volumes, however the agency’s latest proposal for 2019 is yet another example – in fact it’s an annual example of a broken government program that needs a comprehensive legislative solution that includes the sunset of the program,” API downstream group director Frank Macchiarola said in a statement. “The RFS is a backward-looking policy that doesn’t reflect today’s energy market realities of strong domestic energy production.”

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