EPA weighs RFS deadline extension amid high renewable credit costs, sources say

According to three sources familiar with the situation, the Trump administration is considering whether or not to extend a deadline of Sept. 1, which requires oil refiners to demonstrate compliance with the nation's laws on biofuel blends. This could give the industry greater flexibility in dealing with rising compliance costs.

The Environmental Protection Agency (EPA) hasn't made a decision about the timing. It is publicly sticking to the deadline of Sept. 1, 2025 for refiners who want to meet the quotas set by the Renewable Fuel Standard. This standard requires refiners either to increase the amount of biofuels in the nation's fuel supply, or to purchase credits, known as RINs or renewable identification numbers.

A refiner's extension could give them more time to meet obligations. It would also allow for a little extra room to manage the high RIN prices that have increased compliance costs. The RIN market, which is worth billions of dollars, is an important component of the biofuel program and a source of uncertainty for refiners.

The EPA could use the delay to review dozens more requests for waivers of their obligations from smaller refiners. This issue has put the White House at the center of a battle between refiners, and biofuel producers.

The compliance deadline for the 2025 RFS is September 1, 2026. When asked about the possible extension, an EPA spokesperson said that EPA was working to "issue decisions as quickly as possible on pending small refining exemption petitions".

As the White House faces increasing political pressure in the run-up to the midterm elections, it is closely watching gasoline prices. The disruptions to the global energy market following the Iran conflict has raised concerns over further volatility in fuel and oil prices. This is adding urgency to efforts made to limit upward pressure for consumers. The RIN price has risen this year due to refiners' increased compliance costs with the EPA’s ambitious?2026 mandate for renewable fuels. The industry has been struggling to meet these new requirements, especially for biomass-based Diesel, which is contributing to tighter credit supply and higher prices.

Refiners could benefit from a delay in the deadline for compliance by delaying the need to secure additional RINs, or make other arrangements for compliance while the market adjusts.

The deadline of Sept. 1, 2025, covers the RFS obligations. The program allows refiners and other obligated parties to be flexible by allowing them the option to use RINs of previous years as well as credits from current year to meet their obligations. This allows companies to adjust to changing market conditions and RIN price fluctuations and manage compliance.

If the deadline is maintained, the EPA will need to resolve dozens of pending requests by small refiners who are seeking exemptions from the?Renewable fuel Standard. Refiners waiting for decisions are growing increasingly anxious, saying that delays make it difficult to plan compliance strategies.

We heard weeks and not months. We hear days, not even weeks. We need an answer. As you know, compliance deadline is September 1st. As we wait for these SREs, it affects how we can use them to offset a burden," Steven Ledbetter said in HF Sinclair's earnings call on Tuesday.

(source: Reuters)