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EPA Chief Scott Pruitt’s Influence on the Biofuels Industry and the Renewable Fuels Standard

On January 30, former Oklahoma Attorney General and head of the United States Environmental Protection Agency, Scott Pruitt, fielded questions in an oversight hearing before the Senate Environment and Public Works Committee. The hearing, which took place on Capitol Hill, centered around the biofuel industry and how, in particular, recent biofuel legislation was affecting its producers across the country.

Biofuel advocates and environmental groups alike were concerned about President Trump’s appointment of Pruitt to head the EPA; and their concern continued after Pruitt voiced concerns that the US biofuels policy caused the bankruptcy of an East Coast refinery. Philadelphia Energy Solutions, the largest oil refiner on the East Coast, filed for bankruptcy this January and Pruitt cites the bankruptcy as a result of the US policies on biofuels. Philadelphia Energy Solutions specifically blamed the cost of keeping up with the Renewable Fuel Standard – a minimum barometer set forth by the EPA requiring refineries to blend increasing amounts of biofuels into their gasoline and diesel.

In an interview with Fox News, Pruitt claimed the company’s demise was due in large part to the Renewable Fuel Standard, and he further blamed the program’s benchmark that refiners like Philadelphia Energy Solutions purchase or earn biofuel blending credits to prove to the EPA that they were keeping up with the minimum blending requirements. As a result, Philadelphia Energy Solutions owed the EPA an estimated $185 million for biofuel blending credits at the time of their bankruptcy. Pruitt advocates a more conservative approach to the Renewable Fuel Standards which would ease the burden on refiners. For example, Philadelphia Energy Solutions is not the only refiner feeling pressure—Texas’s Valero Energy Corporation has also complained about the high cost of blending credits, the price of which has substantially increased recently. Ethanol advocates are frustrated with Pruitt’s take on the Renewable Fuel Standard and have voiced concerns about the effect that reform will have on US farmers relying on ethanol demand to earn a living. Among other topics broached during the hearing were the year-round sale of E-15; the introduction of sorghum as a source of ethanol; and the need for higher octane fuels. Pruitt said that the EPA has long been focused on the automobile end of the equation rather than the “fuel side of the ledger”—and higher octane fuels are an avenue worthy of exploration. Pruitt’s stance on fuel legislation seems to be fair-minded – it isn’t just about farmers and biofuels advocates; refineries and retailers ought to be considered when legislation affecting fuel is considered. Hopefully, there are not many more refiners like Philadelphia Energy Solutions buckling under the pressure to comply with the Renewable Fuel Standard. Pruitt may not have the support of the ethanol lobby, but it is certainly promising that the head of the EPA is willing to sympathize with the refiners that are bearing the burden of the Renewable Fuel Standard. Time will tell how this conflict is resolved.

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