Trump may have to boost biofuel as court deals blow to oil

Bloomberg

The Trump administration may have to reconsider its proposal from earlier this month to curb biofuel use after a US appeals court in Washington ruled that the Environmental Protection Agency doesn’t have the authority to cut quotas while citing inadequate
domestic supply.
The unanimous ruling by a three-judge panel comes amid conflicting legal challenges to actions taken by the EPA. Some factions claim the agency set renewable fuel requirements too high, while others said they’re too low. Shares of ethanol producers rose on the news while refinery stocks declined.
US Circuit Judge Brett Kavanaugh wrote that EPA isn’t allowed “to consider the volume of renewable fuel that is available to ultimate consumers or the demand-side constraints that affect the consumption of renewable fuel by consumers.”
The ethanol industry hailed the court’s move as a victory. Earlier this month, the Trump administration issued a proposal that for
the first time would cut the am-
ount of renewables that must be blended into the fuel supply under a 12-year-old law known as the
Renewable Fuel Standard.
The court ruling is a blow to oil refiners, including billionaire Carl Icahn, who have argued that there are constraints to blending the fuels into petroleum. The American Petroleum Institute said in a statement it was “disappointed” with the court’s decision, which the trade group said highlighted the need for congressional action to reform the renewable fuel standard — a move congressional analysts have said
is unlikely to happen.
“We are still reviewing the decision, but the fact the court has affirmed our position that EPA abused its general waiver authority by including factors such as demand and infrastructure in a waiver intended to be based solely on available supply is a great victory for consumers and the RFS program,” said Bob Dinneen, chief executive officer of the Renewable Fuels Association, an ethanol
industry trade group.
The targets that the agency set for this year and proposed for 2018 won’t be affected by the court decision, EPA spokeswoman Liz Bowman said in an email. The EPA didn’t base either proposal on its waiver authority, she said.
“Furthermore, today’s decision upheld a number of methodologies and approaches that EPA used in setting the amount of renewable fuels that refiners and importers are required to use,” Bowman said.
In a July 5 statement, the agency, which administers the program, said that the proposal was “consistent with market realities focused on actual production and consumer demand while being cognizant of the challenges that exist in bringing advanced biofuels into the marketplace.”
“This is pretty huge,” said Gene Gebolys, CEO of biofuel producer World Energy Alternatives LLC. “This gives the Trump administration clear guidance on what the legislative branch intended when they passed the law and what the judicial branch meant when they upheld the law.”
Green Plains Inc., one of the biggest US ethanol producers, rose 1.8 percent to $19.80 in New York, the highest price since July 17. CVR Energy Inc., an independent oil refiner that counts Carl Icahn as
its biggest investor, slumped 2.9 percent, to lowest since April 20.
Renewable Identification Numbers (RINs), biofuel credits that track 2017 ethanol consumption quotas, rose 1.2 percent to 82 cents apiece, the highest in a week, data compiled by Bloomberg show. Growth Energy, a coalition of biofuel producers, called the decision
“a major win for consumers.”
“We’re very pleased with the court’s ruling, which restores Congressional intent and will ensure that renewable fuels continue to play a growing and important role in America’s fuel mix,” Growth
Energy Chief Executive Officer Emily Skor said in a statement.
“We appreciate the court recognizing the value of the RFS, and we look forward to working with the EPA to make sure that America’s biofuel targets reflect
the goals set down in law.”