Updates with details from earnings call, reactions
US independent refiner CVR Energy will soon stop producing renewable diesel after President Donald Trump's administration sharply reduced the company's obligation to blend biofuels.
The company will convert a 5,200 b/d renewable diesel unit in Wynnewood, Oklahoma, back to processing crude at the next scheduled catalyst change in December, CVR said on 29 October. It started producing biofuels at the site in 2022, spurred by a federal biofuel blend mandate that CVR majority owner and former Trump adviser Carl Icahn has long criticized.
But the US Environmental Protection Agency (EPA) in August granted various requests from small oil refiners for hardship exemptions from that program, bucking a policy under former president Joe Biden of denying these petitions en masse. Exemptions for CVR's crude processing unit in Wynnewood mean $488mn in reduced liability from the biofuel program, the company said. CVR has also sued the Trump administration for only granting it partial exemptions for four years of mandates, hoping for a bigger windfall.
Coupled with recently poor renewable diesel production margins, the substantially easier requirements for blending biofuels leave CVR with far less incentive to continue making higher-cost renewable diesel. The company had previously flirted with sustainable aviation fuel production at two refineries, too.
"We just didn't see much of a chance really for anything to change in that space that was going to make it a good deal", chief executive David Lamp told analysts on 30 October.
CVR reported a $51mn loss from its renewables unit during the third quarter after turning a modest profit during the same period last year. Renewable diesel producers have struggled this year, hurt by high feedstock costs and uncertainty about future tax credit rules and updates to the biofuel blend program.
CVR also ran into some unique challenges, including primarily processing soybean oil despite also owning a feedstock pretreatment unit that the company will soon shut down. Fuels from soybean oil earn lower subsidies under a new federal biofuel tax credit than fuels from wastes like used cooking oil and animal fats.
Transitioning the refinery back to crude will be "a pretty easy conversion", Lamp said. The facility could also switch back to renewable diesel if policies shift. Notably, the company expects to have to spend $100mn on credits to meet outstanding biofuel mandates before April — but even that was an insufficient incentive to continue making biofuels themselves.
Under the Renewable Fuel Standard, EPA requires oil refiners and importers to blend different types of biofuels annually or buy credits from those that do.
Reallocation fight could heat up
CVR's plan is likely to inflame the farm and biofuel lobbies, which have argued that unchecked small refinery exemptions discourage biofuel production. Soybean farmers in particular have eyed stronger biofuel quotas as a way to at least partly offset the demand hit from Trump's trade wars cutting off export markets.
The Trump administration has tried to mitigate these concerns, including by floating a plan last month to make other oil companies blend more biofuels themselves to offset exemptions. A comment period on that proposal closes on 31 October.
"Small refinery exemptions undeniably destroy demand for renewable fuel", said Paul Winters, director of public affairs at the biomass-based diesel group Clean Fuels Alliance America. The group wants EPA to finalize new biofuel quotas "as quickly as possible" and require other oil companies to compensate for 100pc of the mandated biofuel volumes lost to exemptions, Winters said.
A bipartisan coalition of 49 mostly farm-state members of the US House and Senate wrote to EPA today with the same message, arguing that anything less than "full restoration" of exempted volumes would hurt farmers.
Refineries without small-enough facilities to win exemptions hotly oppose any effort to make them blend more biofuels than their competitors, however. And they point to other Trump policies — including tariffs on common renewable diesel inputs and a plan to halve biofuel credits for foreign feedstocks — that they say run counter to the administration's goal of encouraging more biofuel production.
The US is making refiners choose between "losing more money running renewable diesel plants uneconomically" or shutting those units and hoping they can pass steeper compliance costs onto drivers, said a lobbyist at another refiner. "It's not a great choice but one EPA is forcing refiners to make".
The US is already late setting new biofuel mandates for 2026 and 2027, and the ongoing partial government shutdown has raised fears of these delays stretching into next year.
