(Idea) An Important Update On Calumet
Editor’s Note: In Jon’s last CLMT update, we noted that CLMT is the next special situation we are monitoring, and there are important signals to watch out for. Last week’s SRE announcement was one of them.
By: Jon Costello
Calumet (CLMT) received some good news last Friday with the EPA's granting of Small Refinery Exemptions (SREs) associated with its proposed Renewable Volume Obligation (RVO) for 2026 and 2027. The RVO represents the volume of biofuel that must be blended into the U.S. petroleum supply to meet the Renewable Fuel Standard requirements of the Clean Air Act.
The Clean Air Act stipulates that refineries running 75,000 bbl/d or less of crude oil and that are likely to experience “disproportionate economic hardship” by complying with the RVO can petition the EPA for an exemption. The administration has a target date of October 31 for finalizing its 2026-2027 RVO, so it had to resolve the SRE matter before then.
Friday’s news benefits CLMT by granting its refineries full exemptions for 2021 and 2022 and partial exemptions for 2023 and 2024. Decisions on 2025 exemptions are pending.
The SRE issue has weighed on CLMT’s business outlook and depressed its share price since the EPA released its 2026-2027 RVO proposal on June 13. The SRE decision could have been far worse. If CLMT failed to obtain SREs, it would face a hefty financial burden in complying with the previous years’ requirements. The decision reduces the company’s RIN obligation from 396 million RINs to 89 million. This essentially cut one of the company’s largest liabilities by 78%.