A coalition of industry groups representing the nation’s farmers, ethanol producers, and fuel retailers have come together in a unified voice. In a letter addressed to the EPA, these groups have made a compelling case to reject CVR Energy’s recent appeal regarding the Renewable Identification Number (RIN) trading program.
Background
Late last year, two refineries under CVR Energy–Coffeyville and Wynnewood Refining–submitted a request to the EPA. They proposed changes to the RIN trading program, citing concerns about the current system. According to CVR Energy, the existing setup has led to an “illegal RIN market,” allowing for inflated prices that benefit speculators, criminals, and large retail chain owners.
Industry Stand
The letter, signed by influential organizations such as the Renewable Fuels Association, the National Farmers Union, NATSO, SIGMA, and NACS, highlights several key points. They argue that CVR Energy’s request goes against the core objectives of the Renewable Fuel Standard (RFS). Additionally, they deem the proposal impractical and lacking legal support.
In a joint effort, these industry groups are taking a firm stance against any alterations that could jeopardize the integrity of the RIN trading program. Their united front signifies a strong commitment to upholding the principles of fairness and transparency within the renewable fuel sector.
Potential Disastrous Impacts of Altering the RIN System
The proposal made to fundamentally change the structure of the Renewable Identification Number (RIN) system has raised concerns among various stakeholders. According to industry groups, such alterations could have severe consequences for multiple parties involved in the renewable fuel market. This includes renewable fuel producers, fuel marketers, retailers, farmers, obligated parties, and ultimately, consumers who may face higher prices at the pump.
Increased Market Volatility and Concentrated Power
Limiting the parties eligible to trade RINs could create a significant imbalance in the market dynamics. As a result, there may be a substantial disparity between bids and offers for RINs. This would lead to a more volatile RIN market, with market power becoming concentrated in the hands of a few key participants.
Negative Implications for Market Participants
The groups pointed out that such a decision could adversely impact market players’ ability to hedge their risks effectively. Particularly small and non-integrated hedgers would find it exceedingly challenging to mitigate their exposure. Ultimately, this lack of hedging opportunities could translate to increased costs for consumers when purchasing fuel.
Concerns Over Timing and Compliance
In addition to the potential repercussions of altering the RIN system, concerns were also raised regarding the timing of the proposal. Notably, the group highlighted that the refinery submitting the request failed to adhere to the 60-day period specified under the Clean Air Act for requesting a rulemaking.
Furthermore, the group asserted that the petitioners did not meet the necessary criteria for seeking review beyond the 60-day limit. Thus, questioning the validity and appropriateness of the request made by the refinery.
Overall, amidst these uncertainties and potential disruptions, it is crucial for stakeholders to carefully consider the implications of any proposed changes to the RIN system.
Contributors
- Reporting: Patrick Newkumet
- Editing: Jordan Godwin