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The American Soybean Association (ASA) has warned that U.S. farmers could lose approximately $1 billion if the Environmental Protection Agency (EPA) grants broader-than-expected exemptions for oil refineries from the country's biofuel-blending requirements.
In a statement issued Tuesday, the ASA voiced concern over speculation that the EPA may issue small refinery exemptions (SREs) for the 2025 Renewable Fuel Standard (RFS) compliance year that significantly exceed prior government estimates. Such a move would undermine the record-high blending quotas for biomass-based diesel issued in March, which have been widely praised for reinvigorating domestic production of soy-based fuel used to power trucks, buses, and other heavy modes of transportation.
According to the ASA, excessive SREs could wipe out roughly 500 million gallons of biomass-based diesel demand and translate into approximately $1 billion in lost revenue for U.S. soybean farmers.
'At a time when soybean farmers are already struggling to support our farms, we cannot afford for the rug to be pulled out from under one of our most important sources of domestic demand,' said ASA Vice President Dave Walton, an Iowa soybean farmer.
Futures contracts for both whole soybeans and soybean oil fell in recent days following reports that the EPA intends to extend the September 1 RFS compliance deadline for refiners and to issue decisions on SRE requests by the end of the current month. The agency has informed Agri-Pulse that the new deadline will be included in an upcoming formal action.
The ASA noted that recent news reports and analyses suggest that 2025 SREs could total more than 1.8 billion Renewable Identification Number (RIN) credits under a newly revised methodology currently being developed. If realized, these credits would amount to almost double what the EPA had assumed earlier this year, diluting their market value. The latest blending requirements, known as Renewable Volume Obligations (RVOs), have been broadly welcomed by farmers and biofuel producers alike. U.S. output of biomass-based diesel reached 494 million gallons in June, setting a new monthly record.
Senator Chuck Grassley, a Republican from Iowa, told reporters on Tuesday that any EPA action triggering a surge in RINs would be 'catastrophic to biofuels.' He added: 'What both producers and refiners of biofuels need is certainty, and to bring this idea in that we need more RINs is very, very bad for the American farmer, and very bad for the 43,000 jobs in Iowa that's related to biofuels.'
Source: Agri-Pulse Communications, Inc.