The Environmental Protection Agency had a big announcement on Small Refinery Exemptions (SREs) on Friday.
The agency is acting on a backlog of more than 175-petitions from 38-small refineries dating all the way back to 2016.
EPA officials says the goal is to get the Renewable Fuel Standard (RFS) program back on track but biofuels industry officials are unclear about how that will work.
SRE Decision a Mixed Bag
EPA granted full SREs on 63 petitions to the Renewable Fuel Standard, and partial exemptions on 77. The agency also denied 28 petitions and deemed 7 ineligible.
Paul Winters, Director of Public Affairs, Clean Fuels Alliance America says the result was a good news, bad news story for the industry.
“The exemptions apply to more than 7 billion RIN gallons from prior years. However, EPA is indicating that it’s only returning RINs for 2023 and 2024, which is about 1 .4 billion RINs. Those RINs would still be valid to meet the 2024 RFS volume requirements.”
Will the 2023 to 2025 SREs be Reallocated?
The biofuels industry exoects multiple refiners to object to the decision. So the question remains: how or if the SREs from 2023 to 25 will be reallocated.
Winters says, “1.4 billion RINs returned to the market is a substantial number, especially for 2024 and 2025 where the Biden administration set volumes for biomass based diesel way below where they should have.”
EPA Proposes New Formula for Reallocating SREs
In addition, EPA has proposed a new formula to reallocate gallons exempted from 2023 and later years.
This means EPA still has 57 total exemption requests pending that will be used in finalizing blending levels for 2026 and 2027.
“So what EPA has indicated is that they are going to propose a rule, a supplement to the 2026 and 2027 volumes and they will reallocate the these small refinery exemptions to other refiners,” he says.
So, while the administration is trying to support the biofuels industry, it’s still negative according to Winters.
“They exempted far more small refineries than anyone thought would have,” he explains.
Timeline Unclear
Winters says EPA will send a proposal to the White House next week for a 30 day review, followed by a comment period and hearing on the new proposal.
Eventually the plan is to add this proposal to, for the new framework or small refinery exemption decisions and add it to the 2026 and 2027 RFS rule.
Winters says CFAA will work with EPA on the re-allocations but his will delay the final 2027 RFS rule past the November 1 deadline — adding more uncertainty.
