April 4 – The National Association of Convenience Stores (NACS), the National Association of Truck Service Stations (NATSO), and the Society of Fuel Marketing Associations (SIGMA) recently sent a joint letter to Lee Zeldin, Administrator of the U.S. Environmental Protection Agency (EPA), expressing serious concerns about the possibility that the EPA may have set the Renewable Vehicle Oil Standards (RVOs) too high in the absence of an extension of the 40A biodiesel blending tax credits. serious concerns. They warned that such a move may lead to a spike in RIN (Renewable Identification Number) prices, which in turn would push up retail diesel prices and increase the burden on consumers.
The three associations noted that if the EPA pushes through unrealistic biofuel quotas that cannot be effectively absorbed by the current market, it will inevitably impact the fuel market and exacerbate inflationary pressures. “Without the supporting support of tax credits, a high quota policy will not only not help the market grow, but will take a direct hit on consumers’ wallets.”
The letter emphasizes that while the retail fuel industry supports policies that increase energy independence and stabilize supply, the current biofuels market is in crisis. Since the expiration of the 40A blending tax credit at the end of 2024, coupled with the poorly structured newly introduced 45Z clean fuels production credit, the U.S. biofuels supply chain has been hit hard.EPA data shows that since the end of the tax credit, the total amount of biodiesel and renewable diesel fuel has declined by 58.8%, and is down as much as 50.2% year-over-year.
According to publicly available data, more than 20 U.S. biofuel plants will be shut down or out of service by 2025, involving a market share of nearly 15 percent and a production cut of up to 750 million gallons per year. Of these, Iowa, a large biodiesel-producing state, could close most of its 10 plants, which account for nearly 20 percent of the nation’s biodiesel capacity.
The three associations called on EPA to take full account of these market disruptions in the absence of tax credit renewals and to exercise caution in setting a new round of renewable fuel quotas. They expressed their willingness to work with EPA to advance fuel policies that benefit consumers and are consistent with the administration’s energy transition goals.
