EPA’s latest round of small refinery exemptions is raising concerns within the ethanol industry, after the agency granted exemptions to 29 refineries under the Renewable Fuel Standard.
The exemptions allow qualifying refineries to avoid some of their renewable fuel blending obligations. Renewable Fuels Association President and CEO Geoff Cooper says that can effectively reduce the amount of ethanol required under the RFS.
However, there is another important part of EPA’s decision. The agency has indicated it intends to restore the volumes lost through the exemptions by reallocating those obligations to other refiners.
Cooper says that reallocation is critical because RFA’s primary concern is ultimately protecting the renewable fuel volumes established under the RFS. While EPA has indicated its intention to restore the gallons, that process has not yet been finalized.
The small refinery exemption program dates back to the creation of the Renewable Fuel Standard. It was designed to provide relief for smaller refineries that could demonstrate disproportionate economic hardship while adjusting to the renewable fuel requirements.
Nearly two decades later, Cooper questions whether the program is still serving that original purpose.
Under the law, a refinery processing fewer than 75,000 barrels of crude oil per day can qualify as a small refinery. However, Cooper points out that the size of the individual refinery does not necessarily reflect the size of the company that owns it.
Some qualifying refineries are owned by major oil companies, including companies such as Marathon, Chevron, and Phillips 66.
That distinction also raises a larger question for consumers.
E15 provides drivers with another fuel choice that is typically priced below regular gasoline. At the same time, some refineries owned by major oil companies can qualify for exemptions from renewable fuel blending responsibilities intended to increase the use of fuels such as ethanol.
With gasoline prices putting additional pressure on household budgets and major oil companies generating billions of dollars in revenue, consumers may want to take a closer look at who the small refinery exemption program is actually protecting.
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