The EPA’s latest proposal on how they plan to deal with the backlog of Small Refinery Exemptions (SREs) could have a major impact on farmers.
With a big crop this year, they need biofuels demand to help use those extra bushels.
However, even as recent as last week, small refiners continued to file for exemptions from the biofuels volumes they are mandated to blend under the Renewable Fuels Standard (RFS).
If EPA allows these waivers and the backlog of SREs from 2023 to 2025, without increasing the volumes in 2026 and 2027, it will mean lower biofuels production.
EPA’s SRE Proposal Includes Something Old
EPA’s latest proposal to deal with the backlog of Smaller Refinery Exemptions contains something old and something new.
The good news is EPA is using current methodology to calculate SREs, according to Paul Winters, director of public affairs, Clean Fuels Alliance America.
“They’re looking to protect the market space and preserve the volumes they set for the RFS standard — and that’s a good thing. That’s something we fought for back in 2020 and we’re glad to see that continuing.”
He says EPA’s proposal recognizes the SREs handed out in August have the potential to flood the RIN markets.
“They’re looking to reallocate those volumes and protect future RIN markets to make sure there isn’t a signal sent to the industry to undercut production in future years,” he adds.
A New Twist
However, to accomplish that, Winters says EPA has also offered a new proposal — with a twist.
He explains: “They are proposing to either reallocate 100% of the exemptions that have been handed out to date or 50%.”
The final decision will be based on the volumes of biofuels that will be produced in the future and ensure the volumes EPA is setting for 2026 and 2027 are actually met.
Winters says 100% reallocation is the best option for the biofuels industry, as EPA’s updated dashboard on SREs shows, since August 22, they’ve received 10 new exemption petitions for 2021 through 2024.
“We expect they’re going to continue filing more and more of these exemption petitions. So, EPA needs to adopt the 100% estimate based on what’s been filed so far. Because at the end of the day, that’s not going to represent 100% of all the exemptions that are eventually granted,” he further explains.
This is especially important for farmers because if the exemptions were granted without increased production, it would cut into biofuels volumes for 2026 and 2027.
45 Day Comment Period Underway
Winters says it’s key for farmers to be engaged in the process. EPA is holding a hearing on the rule within 15 days as part of a short 45-day comment period.
