The Environmental Protection Agency this week announced it is granting more exemptions from biofuel-blending rules to oil refineries than initially expected while also seeking to soften the blow to agricultural-based fuels. The decision provides 29 full and partial small refinery exemptions (SREs) under the Renewable Fuel Standard (RFS) program. Eighteen refineries received full exemptions, while 11 received partial, three were denied and two were deemed ineligible, according to the rule.
The approach underscores the difficult balancing act for President Trump between the oil and agriculture industries, two important constituencies with competing demands on biofuel policy. The result is a compromise that gives refiners billions of dollars' worth of breaks while softening the blow to producers of ethanol and biodiesel.
The Renewable Fuel Standard program, which was created by Congress two decades ago to bolster domestic demand and support rural communities, requires refiners to blend a certain amount of biofuels into gasoline and diesel. Many companies, rather than blending biofuels like ethanol and biodiesel themselves, buy tradeable credits — so-called renewable identification numbers, or RINs — from those that do. Those credits have spiked in price this year after the Trump administration set record-high blend quotas and as war in the Middle East strained global fuel supplies.
In an apparent response to concerns that the higher-than-expected SREs would severely dilute the benefit of current blending mandates, the EPA said it would reallocate 100% of the difference between projected and actual exempted volumes for 2025 SREs into the biofuel-blending requirements. The rule is intended to make up for the lost biofuel demand through eventually higher blending requirements elsewhere. EPA says it will act before the end of October. This is the biggest number of exemptions from fuel blending mandates granted smaller oil refineries since 2017.
"Today's announcement by President Trump is a significant improvement from what was originally rumored and recognizes the importance of biofuels production," Sen. Chuck Grassley, R-Iowa, said in a statement.
EPA Administrator Lee Zeldin called the agency's actions a "massive WIN-WIN for America's farmers and small refineries!"