(Reuters) - CVR Energy Inc is looking to convert certain units in its refineries to renewable diesel production to reduce its exposure to the cost of renewable fuel credits (RINs), the company said on Thursday.
The project, which would involve using excess hydrogen capacity and converting some desulfurization units for renewable diesel production, is still in its early stages, the refiner’s chief executive said on its first quarter earnings call.
“The fact of the matter is we have existing assets and excess hydrogen,” said David Lamp, president and CEO of CVR.
CVR Energy’s RINs expense in the first quarter of 2020 was $19 million compared with $13 million in the same period last year.
The company now estimates that its RINs expense will be approximately $65 million to $75 million in 2020.
“We continue to try to mitigate our RIN exposure, which is still way too high,” said Lamp.
The refiner reported a net loss of $87 million, or 87 cents per diluted share, for the first quarter of 2020, compared with a net income of $101 million in the prior year period.
Under the Renewable Fuel Standard, refineries must blend billions of gallons of ethanol into their gasoline each year or buy credits from those that do.
The 10th U.S. Circuit Court of Appeals ruled in January that Environmental Protection Agency exemptions for small refineries can only be used as extensions for refineries that had secured them continuously each year since 2010.
Oil refiners HollyFrontier Corp and CVR Energy, both of which had received waivers the court considered inappropriate, had sought a rehearing in the case but were denied in April.
Reporting by Laura Sanicola; editing by Jonathan Oatis