Refiners Received Most Biofuel Waivers Since 2017

The Trump administration granted oil refineries the largest volume of exemptions from mandates requiring the blending of renewable fuels into gasoline and diesel since 2017. These exemptions, known as Small Refinery Exemptions (SREs), allow certain refineries to be excused from purchasing renewable fuel credits, which are mandated under the Renewable Fuel Standard (RFS) program. The RFS program, established by the Energy Independence and Security Act of 2007, aims to reduce greenhouse gas emissions and increase energy independence by requiring a certain volume of renewable fuels, such as corn-based ethanol and biodiesel, to be blended into the nation's transportation fuel supply annually. Refineries that do not meet these blending requirements must either purchase Renewable Identification Numbers (RINs) from other entities that have produced or imported renewable fuels, or face penalties. Small refineries, defined as those with a crude oil processing capacity of 70,000 barrels per day or less, can apply for SREs if they can demonstrate disproportionate economic hardship in complying with the RFS mandates. The volume of waivers granted under the Trump administration significantly increased compared to previous years, leading to concerns among renewable fuel producers that the program's intended goals were being undermined. Data from the Environmental Protection Agency (EPA), which administers the RFS program, indicated a substantial rise in the number and volume of SREs approved. For instance, reports from the EPA showed that for compliance year 2018, the administration approved waivers that effectively reduced the total renewable fuel volume obligation by hundreds of millions of gallons. This trend continued through subsequent years of the Trump administration, with the total volume of waived renewable fuel reaching its highest point in 2017 and continuing at high levels. Renewable fuel industry advocates argued that these waivers reduced demand for biofuels, thereby lowering prices for corn and other feedstocks used in their production, and negatively impacting farmers and rural economies. They contended that the administration was prioritizing the interests of oil refiners over the environmental and economic benefits of renewable fuels. Conversely, the refining industry maintained that the waivers were necessary for the economic survival of smaller refineries, many of which operate on thin margins and face significant challenges in complying with the RFS mandates, especially when RIN prices are high. The increased granting of waivers became a contentious issue, drawing criticism from environmental groups and the renewable fuel industry, while being supported by refining associations. This policy approach represented a significant shift in the implementation of the RFS program compared to the Obama administration, which had been more restrictive in granting SREs. The cumulative effect of these waivers was a reduction in the total amount of renewable fuel that was effectively mandated to be blended into the U.S. fuel supply, impacting the market for RINs and the overall growth of the biofuel sector.