EPA moves to deny biofuels program changes

The U.S. Environmental Protection Agency (EPA) said on Thursday it plans to deny several petitions from oil groups to start the process toward changing the country's biofuels program.

EPA said it did not believe it should initiate a full rule-making, as requested by multiple groups, to change the so-called 'point of obligation” of the Renewable Fuel Standard (RFS). The RFS is a 2005 policy that establishes annual targets for the volume of biofuels that need to be blended with gasoline and diesel in the United States.

Valero Energy Corp, the American Fuel and Petrochemical Manufacturers (AFPM), HollyFrontier and Monroe Energy have petitioned the EPA to consider pushing this obligation downstream, reducing the onus on refiners that have little to no capacity to blend biofuels at their operations.

The merchant refiners have said they are being squeezed by annual government mandates that require increasing volumes of biofuels. To meet them, they have been forced to buy paper credits in an opaque market, lifting costs.

The change the refiners are requesting 'would not address the challenges associated” with boosting availability of advanced fuels and getting more ethanol into the fuel system, the EPA said in the statement.

Still, some petitioners expressed support for the EPA's decision to open a 60-day public comment period.

'We are very pleased they decided to do this, whereas I would have been ecstatic if they granted it. We live to keep fighting on this issue,” said Chet Thompson, AFPM president.

EPA's decision to open a docket is a sign the issue is 'serious and merits full consideration,” a Valero spokeswoman said.

The oil industry has spent millions lobbying against the controversial RFS program, saying targets set by Congress are unachievable without a major infrastructure and vehicle overhaul.