An analysis by staff members of Sen. Chuck Grasley found holes in a theory that the cost of Renewable Identification Number credits (RINs) drove Philadelphia Energy Solutions (PES) to file for bankruptcy. PES, the 10th largest refinery in the country, filed for Chapter 11 bankruptcy protection on Jan. 22, pinning its financial woes on the Renewable Fuel Standard (RFS).

As mandated in the RFS, the refinery must either blend renewables into its fuel supply or purchase RIN credits from a refinery that does blend renewables. RFS champion Grassley, R-Iowa, directed his energy policy staff to "get to the bottom" of claims that the rule causes financial hardship. The analysis, based on multiple recent studies, found that the biofuels blending requirement and the cost of its RIN compliance mechanism had little to do with the refinery's success.

"I'm concerned any time an American's job could be lost," Grassley said. "After reviewing the facts, I'm confident that the Renewable Fuel Standard isn't harming refineries, that other factors are at work, and that the RFS law is working as Congress intended. Once these facts are known, there ought to be an end to the misleading rhetoric blaming the RFS. I've always said that I'm for an all-of-above national energy strategy. Biofuels are responsible for thousands of jobs across the country. There's no reason biofuels and other renewables can't exist alongside conventional fuels."

PES claimed it could not generate RINs and was therefore forced to buy them. However, reports show the refinery sold 40 million RINs in the fall of 2017, ahead of the Environmental Protection Agency's February RIN deadline. The memo Grassley's staff released Tuesday speculated that PES was hoping to drive down the cost of RINs and turn a profit in buying back the credits that they had sold. The American Coalition for Ethanol (ACE) surmised that poor management at PES was more likely to be the source of its financial struggle.

"As more light is shone on the decisions PES management made between 2012 and today, it has become clear that they sacrificed RFS compliance for other investments which went bad. RIN prices might be a politically convenient excuse for PES but the inconvenient truth is that other merchant refiners who adapted their business model to blend ethanol aren't running to bankruptcy court for protection," ACE CEO Brian Jennings said in a statement. "It would be outrageous for Congress or EPA to reform the RFS based on the mismanagement of one East Coast refiner."

The Grassley memo points out that PES has spent a reported $832 million buying RINs since 2012. Experts say the refinery could have invested around $40 million to build the blending infrastructure needed to secure its requirement by blending biofuels.