The Environmental Protection Agency is proposing to reallocate more than 770 million renewable fuel blending credits tied to small refinery exemptions, a move aimed at preventing the exemptions from reducing demand for ethanol and biodiesel.
EPA Administrator Lee Zeldin announced the proposal during a visit to Iowa, saying the agency wants to ensure exemptions granted to 29 refiners do not lower overall renewable fuel blending requirements under the Renewable Fuel Standard.
The proposed reallocation would protect the equivalent of about 770 million gallons of ethanol from being waived from federal blending requirements.
The EPA is considering two options for reallocating the exempted volumes. One would spread the credits across the 2026 and 2027 compliance years. The other would apply the entire reallocation to 2027.
The action follows the EPA's approval of small refinery exemptions totaling more than 1.7 billion renewable identification numbers, or RINs. Reuters reported the exemptions were the largest ever issued under the Renewable Fuel Standard program.
The exemptions drew criticism from farm and biofuel organizations concerned they would reduce demand for corn-based ethanol and other renewable fuels.
Renewable Fuels Association President and CEO Geoff Cooper said the proposed reallocation could address those concerns. Cooper told Reuters that if the EPA finalizes the plan as proposed, it would offset the loss in ethanol demand resulting from the refinery exemptions.
The Renewable Fuel Standard requires refiners and fuel importers to blend specified amounts of renewable fuels into the nation's transportation fuel supply or obtain credits to meet their obligations.
The EPA proposal is particularly important to corn-producing states, where ethanol plants represent a significant source of demand for the crop.