The Environmental Protection Agency (EPA) approved more Small Refinery Exemptions Friday, prompting backlash from the renewable fuels industry.
Acting on 16 individual SRE petitions from eight refineries seeking an exemption from their Renewable Fuel Standard (RFS) obligations for compliance years 2021–2024, EPA is granting full exemptions to two petitions, granting partial exemptions to 12 petitions, and denying two petitions.
Renewable Fuels Association President and CEO Geoff Cooper says the action by EPA creates even more uncertainty and confusion in the renewable fuel and agriculture markets, which are already under immense pressure from record corn and soybean harvests this fall. “EPA added another 14 small refinery exemptions to the already-massive pile today, based on the agency’s questionable new approach to determining whether those refiners experienced ‘disproportionate economic hardship,'” said Cooper. “We continue to dispute the notion that SREs are warranted at all, as EPA’s own analysis shows that all refiners—large and small—face a proportional RFS compliance obligation and pass their RIN costs through to buyers of their refined products.”
EPA also announced it is reaffirming its policy of returning Renewable Identification Numbers (RINs), previously retired for compliance when a small refinery receives an exemption for a prior compliance year. “While no actual RINs will be returned today, EPA will follow standard agency policy and instruct those impacted to contact the EPA Fuels Program Helpdesk to initiate the RINs return process.”
Cooper called that a “silver lining” that EPA will be returning expired RINs to the six refineries who were granted exemptions from their 2021 and 2022 RFS obligations, but noted at the same time that more than 500 million valid RINs will be issued to eight refineries who were gifted exemptions from their 2023 and 2024 obligations. “Meaning there are now more than 2.5 billion RINs associated with 2023-2025 SREs that are likely to be dropped back onto the market in the months ahead. If EPA fails to reallocate those volumes when it finalizes the 2026 and 2027 RVOs, the impact on biofuel and agriculture markets will be devastating.”
EPA continues to review comments on the supplemental proposed rule that takes into consideration the expected impacts of the August 22 SRE decisions as the agency continues to work on final regulations for the “Set 2” rule. Cooper says today’s action makes it even more important for EPA to finalize 2026-2027 RVOs that “fully reallocate any and all SREs granted, or expected to be granted, for the 2023-2027 compliance years.”