Exclusive: Senator Cruz wants to cap
renewable fuel credits at 10 cents - document
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[December 16, 2017]
By Jarrett Renshaw
NEW YORK (Reuters) - U.S. Senator Ted Cruz
wants to place a cap of 10 cents each on renewable fuel credits - a
fraction of their current value - to help U.S. refiners cope with the
nation's biofuels policy, according to a document viewed by Reuters on
The proposal marks the latest step in talks being mediated by the White
House between oil industry backers and rivals in the ethanol industry
over the Renewable Fuels Standard. Refiners claim complying with the
law, known a the RFS, costs hundreds of millions of dollars a year and
could put them out of business.
Introduced more than a decade ago to help farmers, cut oil imports and
reduce emissions, the RFS requires refiners to blend increasing amounts
of biofuels into the U.S. fuel supply every year, or purchase credits
called RINs from other companies that do the blending instead.
Congress members from corn states this week had asked Cruz, a Texas
Republican, and other lawmakers allied with the refining industry to
offer specific proposals that could lower credit costs without injuring
the RFS, a program defended fiercely by Midwestern states like Iowa and
Cruz's proposals call for the U.S. Environmental Protection Agency,
which administers the RFS, to sell "fixed price waiver credits" at 10
cents each that would satisfy all categories under the Renewable Fuel
The senator also proposed forming a working group of administration
officials, lawmakers and stakeholders to devise a longer-term solution.
The proposals were circulated to administration officials.
Prices of renewable fuel (D6) credits were trading at roughly 70 cents
on Friday, down from 74 cents earlier this week to the lowest level
since early October. The credits had been trading at 90 cents each at
the end of November.
[to top of second column]
U.S. Senator Ted Cruz (R-TX) leaves a meeting of the Senate
Republican caucus for the unveiling of Senate Republicans' revamped
proposal to replace Obamacare health care legislation at the U.S.
Capitol in Washington, U.S. July 13, 2017. REUTERS/Carlos Barria
Officials in the offices of Cruz and the White House did not
immediately respond to requests for comment about the proposal.
Officials for Iowa Senators Chuck Grassley and Joni Ernst declined
to comment, saying Cruz's office had not yet contacted them about
The ethanol industry has said in the past that placing caps on the
credits was a non-starter, and has instead argued for policies to
increase volumes of ethanol in the U.S gasoline supply. They claim
this would boost supplies of the credits, lowering their prices.
"Ted Cruz and his backers donít seem to be taking the White House
seriously. President Trump vowed to protect rural America," Brooke
Coleman, the Executive Director of Advanced Biofuels Business
Council, said in release on Friday accompanying a letter signed by
85 supporters of the biofuels industry urging the White House to
protect the program.
The RFS was introduced by President George W. Bush. It has fostered
a market for ethanol amounting to 15 billion gallons a year.
Refiners like Philadelphia Energy Solutions and Monroe Energy, both
of Pennsylvania, along with Texas giant Valero Energy Corp, lack
adequate facilities to blend biofuels into their products. Valero
put its cost of complying with the RFS at around $750 million last
(Reporting By Jarrett Renshaw and Richard Valdmanis; Editing by
Meredith Mazzilli and David Gregorio)
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