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  • bluecheese4u bluecheese4u Sep 25, 2013 8:43 PM Flag

    Grassley asks EPA if ethanol credit market is being controlled by Wall Street

    Grassley asks EPA if ethanol credit market is being controlled by Wall Street

    4:26 PM, Sep 25, 2013 | by Christopher Doering

    As controversy swells over the cost of special credits tied to ethanol, Iowa Sen. Chuck Grassley asked the agency charged with overseeing the country’s renewable policy for details on what is being done to prevent manipulation and abuse.

    Grassley, in a letter sent Wednesday to Environmental Protection Agency Administrator Gina McCarthy, expressed concern that not enough is known about the role speculators play in the market for credits known as Renewable Identification Numbers, or RINs.

    The RIN credit is a special serial number given to batches of biofuels before they are sold to refiners and gasoline importers looking to comply with a federal mandate to use a certain amount of ethanol. The credit was created by Congress. Instead of blending ethanol, the refiner can choose to purchase RINs to comply with the mandate.

    But there has been concern that the credits, originally seen as a way for refiners and others tied to ethanol to comply with the mandate, have been used as an investment tool for big banks on Wall Street, helping to inflate the cost of the RINs. The fear is that the higher RIN prices have made it more expensive to produce motor fuel with ethanol, costs the oil industry says have then been passed on to consumers at the pump. Most fuel today contains 10 percent ethanol.

    “The EPA needs to provide assurances that this market is functioning for its intended purpose, rather than acting as a profit mechanism for Wall Street banks and other financial institutions,” Grassley said in the letter sent Wednesday.

    Grassley asked the EPA head nine questions, including what safeguards the agency has in place to protect against RIN market manipulation and abuse by those not directly involved in renewable energy. He also asked McCarthy whether the EPA is working to modify the RIN credit market to eliminate manipulation and abusive tradin

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