US biofuels less competitive in low energy price environments, future uncertain - Valero

Author: Alex Snodgrass

2020/07/30

HOUSTON (ICIS)--US biofuels are less competitive in a low energy price environment, Valero said in an earnings presentation.

Another headwind for US biofuels is the uncertainty surrounding the small refinery exemption (SRE) program that allows certain refineries to forego the biofuels mandate.

Some refiners are alleging that the coronavirus has negatively impacted their ability to blend the mandated amount of biofuels and they should be given SREs, which has angered the ethanol industry.

Additionally, Valero said that the company is uncertain if gasoline refiners will absorb the mandated ethanol volumes for 2021, placing more pressure on the ethanol industry.

The US Environmental Protection Agency (EPA) has also postponed the Renewable Volume Obligation (RVO) for 2021 indefinitely due to the coronavirus.

Ethanol is used as a gasoline blendstock, in pharmaceuticals, and in food and beverage applications, such as hand sanitizers and vodka.