Texas Senator Seeks RIN Cap

Biofuel Groups and Others Reject Sen. Cruz's Idea of a 10-Cent RIN Price Lid

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Renewable identification numbers are bought within the refinery industry by companies that are not producing or buying enough renewable fuels to meet their blend volumes under the Renewable Fuel Standard. (DTN file photo)

OMAHA (DTN) -- Leaders in the biofuels industry wrote President Donald Trump on Friday after learning Sen. Ted Cruz, R-Texas, had floated a proposal to the White House that would essentially cap prices for renewable identification number (RIN) credits at 10 cents apiece.

The proposal from the Texas senator, negotiating on behalf of oil refiners, spurred major players in both biofuels and commodity crops industries to send a letter Friday to President Donald Trump detailing why the RIN market exists, how it is operated by EPA, and some of the problems EPA has in providing transparency on RIN trading.

Most importantly, the letter praised President Trump for his support of the biofuels industry and reiterated the need to ensure any policy changes don't undercut billions of dollars in biofuels infrastructure that has been put in place since the Renewable Fuel Standard was created.

"There are ways to address RIN values for refiners without undercutting the RFS and rural America. We have been working on many of them for years, and we would welcome the opportunity to move these ideas forward," stated the letter, which was signed by a collection of 89 ethanol companies and trade groups, as well as farm organizations and agricultural companies.

The letter comes after Cruz floated a proposal to the White House that would cap the RIN price at 10 cents each. In comparison, the D6 RIN was trading at 71 cents Friday afternoon, after falling from an opening price of 74.5 cents. RIN prices have been falling since briefly hitting $1.09 in late October.

RINs are generated when a qualified renewable fuel is either produced or imported. RINs then are bought within the refinery industry by companies that are not producing or buying enough renewable fuels to meet their blend volumes under the Renewable Fuel Standard. There are several nested categories for RINs depending upon the renewable -- such as corn ethanol or biodiesel -- which do have different values. D6 is considered the baseline RIN.

In a proposal for the biofuels industry, Cruz proposes the EPA would sell 10-cent, fixed-price waiver credits that would qualify as RINs and satisfy a petroleum blender's renewable volume obligations. The proceeds from these 10-cent waiver sales then would go specifically to help pay for renewable-fuel blending infrastructure, tied to an existing program such as the Biofuel Infrastructure Partnership or a similar fund.

Long term, Cruz proposes a working group including Trump administration officials, members of Congress and industry stakeholders to come up with a long-term solution to the RINs.

Leaders in the ethanol industry criticized Cruz's proposal. Emily Skor, CEO of Growth Energy, said Cruz's proposal "sabotages" the talks on the RFS that Cruz requested.

"Undermining the RFS is not an option. It is working to revitalize the rural economy, as promised by the president, and no one is going to accept gimmicks designed to slow the growth of homegrown fuel," Skor said. "The ready solution to Senator Cruz's stated concerns is to blend more ethanol and send clear regulatory signals about the future growth of biofuels under the RFS. RVP relief would immediately add another three months' worth of E15 sales to the market. That's how RFS is meant to work."

Further, Cruz has yet to release his confirmation hold on Iowa Agriculture Secretary Bill Northey's nomination as a USDA undersecretary, Skor pointed out.

Brooke Coleman, executive director of the Advanced Biofuels Business Council, said Cruz and his backers don't seem to be taking the White House's position seriously when it comes to support for renewable fuels.

"President Trump vowed to protect rural America," Coleman said. "No one is going to raise costs on consumers, jeopardize our energy security, and threaten jobs across the Heartland based on misinformation about how the RFS works. Instead of refinery handouts, we should cut the red tape and let customers decide whether to buy E15 all year long."

Other biofuel industry leaders, such as Adam Monroe, president of Novozymes Americas region, called for more ethanol blending to stabilize RIN prices. Further, EPA could eliminate restrictions that limit when 15% ethanol blends can be sold. That would put more RINs on the market to lower the prices, Monroe said.

"The RFS is revitalizing the rural economy, and the president is not going to fall for gimmicks designed to slow down growth of homegrown renewable fuel," Monroe said.

Cruz's proposal comes after Agriculture Secretary Sonny Perdue acknowledged earlier this week at an event in Washington, D.C., that changes are needed to the RFS to help oil refiners deal with speculation in the RIN market.

"The president understands we've got to do something about RIN prices," Perdue said on Tuesday. "The good news is there's a win-win in here. It's very complex, but there's a win-win."

The biofuels industry letter to President Trump can be found here: https://goo.gl/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN


Chris Clayton