By Stephanie Kelly
NEW YORK (Reuters) - A bipartisan group of U.S. lawmakers introduced legislation this week directing the Biden administration to allow oil refiners to purchase compliance credits for U.S. biofuel blending laws at a lower, fixed cost compared to the open market.
The proposal would reduce rising compliance costs associated with the U.S. Renewable Fuel Standard (RFS) and aim to help struggling refineries stay afloat at a time of great flux in the global energy markets, lawmakers said.
As part of the standard, oil refiners must blend billions of gallons of biofuels into the nation's fuel mix, or buy tradable credits from those that do.
Oil refiners argue the mandates are pricey, while biofuel proponents like ethanol producers and corn farmers like the obligations because it increases the market for their products.
Under the proposed bill, refiners could buy credits around conventional biofuel blending, which includes corn-based ethanol blending, at the fixed price if they are not able to obtain them in the market at cost-effective levels, according to a news release.
News of the bill caused prices for the credits, known as RINs, to dip.
"We can and must do more to address volatile and soaring compliance costs driven by fuel mandates that are out of step with domestic fuel demand,” said Chris Coons, who introduced the bill along with fellow Democratic Senator Bob Casey and Republican U.S. Representative Brian Fitzpatrick.
It is unclear whether the measure, unveiled on Tuesday, will pass. Issues around the RFS typically draw strong lobbying efforts from both oil refining advocates and biofuel advocates.
The bill must pass both the Democratic-controlled Senate and the Republican-led House of Representatives before it could reach President Joe Biden's desk, who would decide whether to sign it into law.
Renewable fuel credits traded at $1.54 each on Tuesday after the bill came out, down from $1.56 prior, traders said. Credits traded on Wednesday between $1.55 and $1.56 each amid U.S. government data release.