January 17, 2023 - Last month, Senator Chris Coons (D-Del.) joined regional labor leaders on the Labor Show with J Doc and Krausey on 1210 WPHT to discuss the potentially devastating impacts EPA’s federal Renewable Fuel Standard (RFS) proposal for the next three years could have on America’s independent refineries, refinery workers, and consumers at the fuel pump.
After the Environmental Protection Agency (EPA) announced its proposed ethanol volume mandates for 2023, 2024, and 2025 earlier this month, the Senator and a bipartisan group of members of Congress announced plans to address this looming crisis.
Senator Coons explained how the group plans on proposing legislation to contain volatile RIN prices by issuing a government-backed RIN at a lower, fixed cost – allowing our nation’s refiners to plan for the future and continue supporting their families and communities.
EPA’s Flawed RFS Proposal: High RINs, High Costs
The RFS was signed into law in 2005, and then greatly expanded in 2007. It mandates refiners to demonstrate that a certain amount of ethanol or advanced biofuels are blended into the U.S. fuel supply. Independent refiners that do not have control over biofuel blending have to purchase Renewable Identification Numbers (RINs) to be in compliance with the program.
“The EPA has set the level for how much you're supposed to blend the last couple of years well above production. And so, these refiners, great employers of union labor in Delaware, Pennsylvania, New Jersey, have to go out on the marketplace and buy RINs,” Sen. Coons explained. He shared that the cost had risen to 1.91 per RIN, creating a more than $1 billion anchor that weighs down the area’s refineries.
The bill being developed by Senators Bob Casey (D-Penn.) and Chris Coons (D-Del.), and Representatives Mary Gay Scanlon (D-Penn.), Brendan Boyle (D-Penn.), Donald Norcross (D-N.J.), and Brian Fitzpatrick (R-Penn.) will essentially create a price cap for RINs – signaling to EPA that the agency must find a way to keep the prices of RINs affordable.
“These RINs would be dedicated to advancing biofuels, restoring habitat, but bluntly, putting a cap on the price,” explains Sen. Coons. "So that we don't have to have this up and down and up and down for the refinery, and we don't have to have folks we care about worrying about their jobs and whether or not the refineries are going to be sustainable for the long term.”
Senator Coons shared his disappointment over EPA’s proposed biofuel blending levels, released [epa.gov] on December 1. In recent years, EPA has continuously set blending levels above the amount of ethanol that all our engines and refueling infrastructure was built to handle, causing the price of RINs to soar even higher.
“The thing I'm upset about is that this means we have six more months at least of where high RINs prices are putting a downward pressure on the refineries and I'm frankly out of patience,” expressed Sen. Coons. “That's why Senator Casey and I are working on a bill to introduce to make it clear there [are] two paths. And if this rulemaking does in fact finally address the issue – does in fact finally come up with a path forward that is sustainable for our refineries – great. If it doesn't, we're going to start pushing legislation because I've been saying for too many years, we're going to fix this.”
Heeding Calls to Fix the RFS & Control RIN Prices
Senator Coons made it clear that he has heard the countless voices in Delaware, Pennsylvania, New Jersey, and across the nation that are calling for RFS reforms. “I get calls, I get letters, I get emails from building trades members from Delaware in the region all the time. We’ve got to fix this instability. It's just not acceptable.”
“I hear from folks all the time about the price they pay at the pump. Thank God the price of gas is coming down a little bit. But this is a way we could quickly give some relief to folks at the pump – give certainty to the men and women who work at our refineries. At a time when we don't have enough refinery capacity in our country, we cannot afford to have any more refineries close,” said Sen. Coons in his final remarks.
The RFS has limited impact on large integrated producers – “Big Oil” refiners – that are able to absorb these costs. Some of these large oil companies actually profit handsomely on RIN sales. On the other hand, independent refiners are unable to recover all of these costs. Some have been forced to close their doors permanently, or close and convert to renewable diesel plants that make 70 percent less fuel with only one third of the workforce.
Reduced domestic refining capacity is a lose-lose—it means higher consumer fuel prices, fewer good-paying union jobs, and increased reliance on foreign fuel imports. It is critical that members of Congress work with Sens. Coons and Casey, and Reps. Scanlon, Boyle, Norcross, and Fitzpatrick to fix the unproductive, unpredictable, and unsustainable costs of the RFS once and for all.