US biofuels industry claims PES are 'skirting the law' on RFS

The US biofuels industry has slammed the decision to relieve the Philadelphia Energy Solutions refinery of roughly half of its $350 million (€283 million) in outstanding Renewable Fuel Standard (RFS) compliance obligations.

On 12 March, the Environmental Protection Agency and the Carlyle Group backed Philadelphia Energy Solutions (PES) came to the agreement that the troubled refiner would not have to pay its full obligations under the RFS.

Speaking to Biofuels International, Emily Skor, CEO of US ethanol trade association Growth Energy, suggested that the Carlyle Group had received “a free pass for skirting the law.”

“They pulled hundreds of millions of dollars out of the company, while neglecting PES workers and the long-term biofuel investments that have allowed other refiners to post surging profits under the RFS,” Skor explained.

The largest oil refiner on the US East Coast, PES announced its bankruptcy in January 2018. The announcement pointed to the RFS as being partially responsible for the refiner’s financial troubles. On 1 February, EPA Administrator Pruitt suggested in a Fox News interview that US biofuels policy was in a need of an overhaul in response to PES’ fate.

The RFS requires refiners to either blend biofuels into their product, or buy credits known as Renewable Identification Numbers (RINs).

 

A dangerous precedent

Skor explained the potentially far-reaching consequences of the EPA’s recent decision to Biofuels International.

“Make no mistake, every RIN [Renewable Identification Number] obligation the court disregards would represent a gallon of homegrown biofuel that can’t make its way to consumers, can’t contribute to US energy security, and can’t grow the US economy.

“It effectively floods the market with credits that will never contribute to America’s goals under the RFS, exactly what refiners have wanted from the start.”

Politicians from oil producing states, as well as the US refining industry itself, have been campaigning for reform to the RFS, saying it unfairly burdens refiners and producers while aiding corn-producing states such as Iowa.

“If this sue-and-settle-style plan is approved, it sends a terrible message to investors who have played by the rules. With farm income at a 12-year low, rural America can’t afford another handout to refinery owners.”

 

Legal challenge?

Speaking to Reuters, Michael McAdams, head of the Advanced Biofuels Association, questioned the legality of the agreement between PES and the EPA.

“I am very troubled at the precedent this sets and there are discussions underway whether the EPA has the legal standing to grant the relief. We are exploring our options.”

Meanwhile, Iowa Senator Chuck Grassley shared Skor’s concerns about the message the agreement with PES will send to refiners who’ve ‘played by the rules’ of the RFS.

He told Reuters: “How are the RIN obligations being treated compared to the other obligations of PES? Does this set an unfair precedent for other refiners that continue to act in good faith to comply with the law?”

 

This article was written by Daryl Worthington, editor of Biofuels International 

 

This article was updated on 15 March. The original headline wrongly suggested that Growth Energy had accused both the EPA and PES of 'skirting the law'.