Oil refiners shelled out $2bn in 2016 to meet Renewable Fuel Standard requirements

Oil refiners contributed more than $2 billion (€1.87bn) to meet US biofuels requirements in 2016, a 70% surge that helps fuel a growing debate over who should shoulder the costs for meeting environmental regulations, according to a media report.

A Reuters review of regulatory filings from ten refiners, including Valero Energy Corp and CVR Energy Inc, showed that they paid $2.22 billion last year for compliance credits that companies use to prove they are meeting annual government requirements for volumes of biofuels to be blended with gasoline and diesel.

According to Reuters, that was 68% more than in 2015 and well above the previous record of $1.3 billion reached in 2013, when prices for paper credits, which trade in an opaque market, spiked to historic levels. Oil companies including refiners can either blend biofuels or buy the compliance credits, known as Renewable Identification Numbers (RINs), from those that have.

Refiners without blending operations have been chafing for some time over the rising costs to meet the US Renewable Fuel Standard (RFS) requirements. They have been pushing for that burden to be shifted downstream from refiners to those closer to the gas pump, the Reuters report said.

That charge has been led by Valero and more vocally by Carl Icahn, the billionaire investor and majority stakeholder in CVR, who has attempted to reach a deal with a major biofuels industry group to agree to shift that burden, known as "point of obligation."

Icahn's role has drawn criticism from ethanol producers and other biofuel industry representatives because he is serving as a special advisor on regulations to President Donald Trump, a friend who he supported in his 2016 campaign.

Icahn has been accused of using his influence to favour a change that has direct financial benefit to him given his ownership in CVR. That stock has soared since the election, rising 63% since 8 November,2017,  though shares were down Friday (10 March, 2017) for a seventh straight day. Icahn says refiners are at risk of buckling under the increasing costs.