John Bel Edwards and four other governors have petitioned the Environmental Protection Agency to waive U.S. biofuel blending requirements—citing a spike in the cost of tradable credits refiners use to prove compliance.
Credit costs have more than doubled this year and the coronavirus pandemic’s impact on fuel demand have spurred at least one domestic oil refinery, Feedstuffs reports.
Other governors requesting the waiver are Greg Abbott of Texas, Gary Herbert of Utah, Kevin Stitt of Oklahoma and Mark Gordon of Wyoming.
“The macroeconomic impacts of COVID-19 have resulted in suppressed international demand for refined products, like motor fuels and diesel,” the governors wrote. Having to add ethanol “present[s] a clear threat to the industry under such circumstances.”
American Fuel & Petrochemical Manufacturers President and CEO Chet Thompson said in a statement last week that for many US refineries, RFS compliance has been one of the top annual operating costs—even higher than employee payroll.
“This is an indefensible burden,” he said, “especially now as COVID-19 has upended the market for gasoline and refined products and the refining industry nationally is running at low enough capacity that facilities are being forced to idle.”
The National Biodiesel Board says a waiver of Renewable Fuel Standard volumes set more than a year in advance would be damaging to tens of thousands of workers—particularly in Texas and Louisiana, which combined hold more than 20% of the nation’s biomass-based diesel production capacity.
Renewable Fuels Association President and CEO Geoff Cooper, in a letter Friday to U.S. Environmental Protection Agency Administrator Andrew Wheeler, reminded EPA that a waiver may only be granted if petitioners can show that “economic harm” is “severe” in nature and is a direct result of the RFS, not some other factor.
According to the RFA, 73 ethanol plants in the U.S. are now idled with 71 significantly reducing operations to deal with the impact of the coronavirus as it destroys fuel and fuel ethanol demand.
The RFA estimates that U.S. ethanol sales in 2020 could fall by more than $10 billion, and the industry’s contribution to gross domestic product could drop by nearly one third.