The U.S. Environmental Protection Agency is implementing new regulations to curb speculation in the biofuel credit market, focusing on non-industry participants and enhancing transparency under the Renewable Fuel Standard. The measures, part of a broader policy review, aim to reduce compliance costs for oil refiners while maintaining support for corn-based ethanol production.
Proposed rules would prohibit banks and financial institutions from trading Renewable Identification Numbers (RINs), credits used to meet biofuel blending requirements. This follows longstanding complaints from refiners about price fluctuations driven by speculative trading, which has forced smaller entities to pay inflated prices for credits. The restrictions align with the Renewable Fuel Standard, established in 2005 and expanded in 2007 to boost corn ethanol demand.
The EPA’s plan includes mandatory disclosure requirements for large RIN holders exceeding 120% of their compliance obligations. Additional provisions call for quarterly credit retirements, limits on stockpile durations, and enhanced market monitoring. A source described these steps as designed to limit hoarding and improve market liquidity.
Michael Abboud, an EPA spokesman, declined to comment on the proposal. The agency submitted the draft rule to the White House for review ahead of the summer driving season. The measures coincide with another EPA initiative to expand year-round sales of E15 ethanol blends, part of efforts to balance interests between oil refiners and agricultural sectors.
