Outlook questionable for energy bill, amendment on renewable fuel

Legislation that would provide Renewable Fuel Standard (RFS) credits to refiners at a moderate price may languish without action along with the energy bill it was intended to amend.

The energy bill, actually a compilation of more than 50 bills with a primary focus on research and development, was proposed by Sens. Lisa Murkowski (R-Alaska) and Joe Manchin (D-W.Va.). It looked headed for swift Senate passage in early March but was derailed Mar. 9 by a dispute over how to reduce the use of a class of chemicals called hydrofluorocarbons (HFCs).

Before the bill stalled, Sen. James Inhofe (R-Okla.) introduced an amendment that would require the Environmental Protection Agency to sell RFS credits to oil refiners at 10 cents/gal. That would be a boon especially to small refiners who purchase credits in a fluctuating, often expensive specialized market.

Prices for the credits—renewable identification numbers (RINs)—have fluctuated up and down in recent years mostly because of the supply and demand of RINs, not because of the actual cost of making and transporting ethanol or biodiesel. The RIN for conventional ethanol over the last 4 years has ranged in cost from less than 10 cents/gal to more than $1.

Inhofe’s RFS proposal could face opposition senators whose states grow corn for ethanol.

“I think the likelihood of any RFS legislation passing in an election year is low. But we’re hopeful,” said Geoff Moody, vice president of government relations at the American Fuel and Petrochemical Manufacturers (AFPM).

Bill lacks political urgency

To make it more difficult, the American Energy Innovation Act, as Murkowski and Manchin named their bill, does not have the advantage of urgency or necessity. In an election year troubled by partisanship, it may simply slip off the Senate agenda for final action. If it made it through the Senate, it would face another gauntlet in the House.

The bill was tripped up by a proposal for a phasing down of HFCs, used for refrigeration, air conditioning, fire suppressants, and other purposes. HFCs are considered ozone-depleting substances, although less so than the class of chemicals they replaced, the chlorofluorocarbons.

Sen. John Barrasso (R-Wyo.) was troubled that the proposal on HFCs had not been run through the Senate Environment and Public Works Committee, which he chairs and which has jurisdiction over the subject. The committee now has taken testimony electronically—avoiding a hearing in a time of coronavirus—and will go through electronic questioning and answers while the energy bill waits.

Inhofe’s proposal is only one of many for improving or replacing the renewable fuels program. Moody’s association, AFPM, has several proposals, including one that would phase out the RFS program while establishing a 95-octane standard for new vehicles. Sales of ethanol, a high-octane blendstock, could benefit from such a standard, which for refiners would be less burdensome.

Ethanol producers and their allies have not agreed to 95-octane strategy. “I would say there’s continuing constructive dialog about that,” Moody said.