Witnesses from the American Petroleum Institute and the Renewable Fuels Association appeared equally dissatisfied with the US Environmental Protection Agency’s recently proposed 2019 biofuel quotas under the Renewable Fuel Standard at a public hearing in Ypsilanti, Mich. They also identified different underlying problems as they separately testified at the hearing on July 18.
API Senior Fuels Policy Advisor Patrick Kelly called on EPA to use its authority to issue waivers until Congress can fix what apparently is a badly broken RFS. “The primary RFS concern is the ethanol blend-wall,” he said. “Serious vehicle and retail infrastructure compatibility issues continue to exist with gasoline containing more than 10% ethanol.”
Three out of four cars on the road were not designed for higher ethanol blends such as E15, and history demonstrates that motorists have largely rejected E85, Kelly said. Gasoline demand increases and commercialization of biofuels that were projected when Congress expanded the RFS in 2007 have not materialized, he said in his testimony.
“Congress provided the waiver authority that EPA should use to further reduce the 2019 volumes to avoid negative impacts on America’s fuel supply and prevent harm to consumers,” Kelly said. API is urging EPA to not exceed 9.7% ethanol in the gasoline pool for 2019 to meet the strong demand for ethanol-free gasoline that continues to exist, he said.
But RFA Vice-Pres. for Government Affairs Samantha Slater noted that while the proposed 2019 quotas appear to raise the requirement 3% from 2018 levels, “EPA’s failure to stem the tide of small refinery waivers, its refusal to reallocate lost blending volumes, and its brazen repudiation of binding court decisions [make] the proposed rule…superficial and toothless.”
The 15 billion-gal requirement for corn ethanol and other conventional biofuels should, in theory, send a positive signal to the market, she said in her testimony. “The proposed rule, though, comes in the wake of 2.25 billion ethanol-equivalent gal of demand destructed by illegal waivers to small refineries, and no commitment that EPA is changing its approach to granting these exemptions,” Slater said.
Upward RIN pressure
Scott Hayes, who manages the health, safety, and environmental department at Toledo Refining Co, in Oregon, Ohio, warned that EPA’s proposed increase in the RFS requirement “could result in upward pressure on [Renewable Identification Number] costs, which as we saw earlier this year with Philadelphia Energy Solutions [(PES)], would once again threaten highly skilled domestic refining industry jobs.”
PES, which operates two refineries in Philadelphia with a total of 335,000 b/d of capacity, reached financial restructuring agreements with holders of 100% of its Term A debt and more than 90% of its Term B debt, its PES Holdings LLC subsidiary reported on Jan. 22 (OGJ Online, Jan. 23, 2018).
“To avoid this situation, EPA should use its waiver authority to prevent ‘severe economic harm’ and reduce the proposed 15 billion gal conventional biofuel requirement to a level that reflects 9.7% of projected fuel demand,” Hayes stated. “This reduction would accurately reflect the ethanol volume all vehicles and infrastructure can safely handle.”
The RFA official also said EPA missed an opportunity in its quota proposal to address the disparate treatment of E10 and E15 regarding volatility regulation, she said. “Decades-old EPA gasoline volatility regulations prevent the sale of E15 in much of the country in the summer months, despite E15 having lower volatility than E10,” Slater said.
Noting that US President Donald Trump has called this Reid Vapor Pressure barrier “unnecessary” and “ridiculous” and directed EPA to fix the problem, Slater asserted, “These gasoline volatility regulations are exactly the kind of job-killing EPA regulations that need reform.”
Contact Nick Snow at [email protected].
