RFS flaws need to be addressed soon, API official warns

Problems in the federal Renewable Fuels Standard that have emerged over several months need to be addressed soon, an American Petroleum Institute official warned. But he added that the oil and gas industry’s largest association isn’t ready yet to join livestock producers in seeking an RFS waiver for 2013.

“We’re trying to educate policymakers. This obviously is a complex issue, but one which has real world implications,” API Downstream Director Bob Greco said. “We need a solution. In some cases, it will need to be legislative. Others, it will be regulatory. Congress is starting to get interested in this, and we could see something, possibly next year.”

Flaws that have emerged range from the so-called ethanol blend wall, which he said could arrive as soon as next year, to requirements for refiners to use cellulosic biofuels that don’t yet exist, he told reporters during an Aug. 8 teleconference.

Mandates under the 2007 Energy Independence and Security Act pose problems because biofuel requirements were based on projections of significantly higher gasoline demand than what has occurred; the commercial cellulosic biofuel production which was expected to materialize in a few years has not; and issues involving the 10% ethanol blend wall and possible impacts of using more in motor fuels were not fully comprehended, API said in a new analysis.

The US Environmental Protection Agency’s approach to implementing some of these mandates also has created problems, Greco said. “Some things are out of its control,” he said. “Others, such as cellulosic mandates, involve authority it already has. Since EPA has refused to recognize the reality of the cellulosic market, Congress may need to address it.”

Contact Nick Snow at nicks@pennwell.com.

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