US EPA head calls for biofuels policy reform

The head of the US Environmental Protection Agency Scott Pruitt said this week that the country's biofuels strategy needs major revision in view of the recent bankruptcy of a Pennsylvania oil refiner.

Pruitt told Fox News that the bankruptcy was mainly the result of the US Renewable Fuel Standard, and focused on the program’s stipulation that refiners earn or buy biofuel blending credits, known in the jargon as Renewables Indentification Numbers, which are used to show  to the EPA that they are meeting their obligations.

Last week Philadelphia Energy Solutions, a major East Coast refiner, filed for bankruptcy citing the high cost of complying with the RFS.

The RFS requires refiners to mix corn-based ethanol and other biofuels into their gasoline and diesel.

“We need RIN reform,” Pruitt said, pointing out RIN prices had risen in recent years. “It is something I’ve talked to Congress about,” Reuters reported, citing the Fox News report. 

The EPA chief said he wanted to take a more cautious approach to setting annual biofuel blending volume requirements, a proposal that has has been met with fierce resistance from ethanol producers.

Under the RFS, refiners are required to blend 57 billion litres of ethanol into US fuel requirements each year.

“We set volume obligations every November,” Pruitt told Fox News. 

“Our job should be to take the market and production levels and set volume obligations that are consistent with objective factors – not set inflated or blue-sky types of numbers that create this inflationary pressure on RINs.”

Biofuels producers were predictably hostile to to the remarks, with the Renewable Fuels Association saying in a statement: "It would be disappointing, to say the least, if EPA now began to increase the number and magnitude of exemptions granted [from the RFS], a decade after the program began."