By Stephanie Kelly
NEW YORK (Reuters) – The Environmental Protection Agency is considering issuing proposals for U.S. biofuel blending obligations for both 2021 and 2022 at the same time, two sources familiar with the matter said, after the coronavirus pandemic delayed rulemaking.
The proposals are a crucial signal to the corn and oil industries because they outline precisely how many gallons of biofuels like ethanol the refining industry must blend into their transportation fuel under the U.S. Renewable Fuel Standard.
An EPA spokesperson said the agency was still looking at options, but did not comment on whether it was considering combining the proposals. Michael Regan, President Joe Biden’s pick for EPA chief, is awaiting confirmation.
The agency has previously combined proposals for multiple years of requirements after missing deadlines, most recently in 2015, when it dealt with 2014, 2015 and 2016 at the same time.
Under the RFS, refiners must blend billions of gallons of biofuels into the nation’s fuel mix, or buy credits from those that do. Refiners can apply for exemptions if they can prove the obligations would cause them financial harm.
The oil and biofuel industries have fought over the policy for years, with refiners saying it is a costly regulatory burden and ethanol producers saying it is crucial to the survival of their industry and the farmers that support it.
Refiners are hoping that the EPA will not hike blending obligations, given the pandemic’s travel restrictions have severely eroded overall fuel demand, and have requested that the EPA use its authority to ease compliance.
The biofuel industry has countered that it too suffered demand destruction amid the pandemic and weakening requirements would hurt them.
U.S. renewable fuel credits have skyrocketed since the beginning of the year in part to bets that the Biden administration will reduce the number of facility-specific waivers it hands out, traders said.
Renewable fuel (D6) credits for 2021 traded at $1.30 each on Wednesday, up more than 60% since the beginning of the year. Biomass-based (D4) credits traded at $1.35 each, up nearly 30%.
(Reporting by Stephanie Kelly; Editing by Marguerita Choy)
