A US House of Representatives Republican task force devising major reforms to road fuel markets has revised an earlier proposal to allow more gasoline and diesel to be exempted from annual biofuel quotas.
The lawmakers last week floated limiting exemptions to 450mn program credits a year but is now considering a plan to raise that amount to 550mn credits a year in a bid to assuage oil refiners, according to three people familiar with the debate.
The House last month punted on legislation that would have allowed year-round sales of gasoline containing 15pc ethanol (E15), up from 10pc currently, and that would have revamped the US biofuel quota program. Instead, the House asked a new E15 Rural Domestic Energy Council comprised of Republican lawmakers to propose changes.
The US Environmental Protection Agency (EPA) requires oil companies to annually blend minimum volumes of biofuels or buy Renewable Identification Number (RIN) credits from those that do, while letting small refineries bid for hardship exemptions that can save them tens of millions of dollars. One gallon of corn ethanol generates one RIN, while more energy-dense fuels like renewable diesel earn more.
Exemption decisions have varied wildly over time, although President Donald Trump's administration has unnerved farmers by granting many refiners' hardship requests — including nearly 1bn RINs exempted from 2024 quotas, initially set at 21.5bn credits. The program is important for crop demand and retail fuel prices, and the council has tried to devise changes to make the program more predictable.
The E15 council's latest proposal would make some changes immediately, including allowing year-round sales of E15 gasoline and blocking some Midwestern states from requiring a boutique fuel blend this summer that would allow more ethanol blending.
The plan would also maintain an earlier provision that compensates some unnamed small refinery owners for past compliance by providing them with special RINs that do not expire. A framework shared with Argus shows that these credits — estimated at 363mn RINs — could be provided to refiners this year.
But the big changes to exemptions would take effect starting in 2028, a win for farm groups that were concerned the council's work would delay the Trump administration's efforts to set new biofuel quotas in the coming weeks.
The latest plan would require EPA to exempt no more than 550mn RINs from annual biofuel obligations, starting in 2028, although that cap would increase or decrease proportionally as mandates get more or less ambitious. Regulators would not be able to force other companies to blend more biofuels to offset their smaller rivals' waivers, also starting in 2028, an addition pushed by oil majors.
All refineries currently eligible could apply for exemptions, although the E15 council's latest plan would remove a requirement that only facilities that qualified at the program's outset could continue winning them, allowing refineries that process no more than 10,000 b/d of crude that started up later to compete for relief.
An earlier bill backed by the American Petroleum Institute would have restricted exemptions to companies with limited collective refining capacity, angering firms that would have lost the ability to win exemptions for smaller units they own. The council instead wants to let EPA decide which facilities deserve relief, letting small companies, mid-sized refiners like Delek and even oil majors like Chevron still compete for a smaller pool of exemptions.
The process for applying for hardship relief would largely stay the same, though refineries would have to apply for 2028 exemptions ahead of time and could appeal initial decisions. Under current rules, companies can submit hardship requests — including for years-old mandates — at any time.
The proposal otherwise tracks closely with one the council circulated last week, including banning the creation of credits tied to electric vehicles and tasking a government watchdog with studying the mandate's impacts on fuel costs and refining capacity.
Debate continues in Congress
But the council's efforts to boost E15 sales and limit exemptions, already challenged by a backlash from refiners and skepticism from some Republicans, still face an uphill battle.
A group of farm groups and fuel retailers told lawmakers in a letter last week to not exempt any more than 450mn RINs. Oil refiners that benefit from the current exemption system have little reason to support changes.
The council missed a goal of reaching an agreement by 15 February but has a separate goal that Congress will weigh the legislation by 25 February. The proposed biofuel changes would likely be added to larger legislation, but it is not clear what bill that would be. The office of council co-chair Randy Feenstra (R-Iowa) declined to comment.
