Supporters, as well as critics, call for RFS reforms

Calls to reform the federal Renewable Fuels Standard increased as critics and supporters alike said it is not working as it was intended. Its corn ethanol mandates need to be repealed, officials from the American Petroleum Institute, Environmental Working Group, and antihunger group ActionAid USA jointly said at a Mar. 11 press event.

Calls to reform the federal Renewable Fuels Standard increased as critics and supporters alike said it is not working as it was intended. Its corn ethanol mandates need to be repealed, officials from the American Petroleum Institute, Environmental Working Group, and antihunger group ActionAid USA jointly said at a Mar. 11 press event.

Bob Greco, API downstream group director, said the nation’s largest oil and gas trade association remains concerned that increasing ethanol mandates under the RFS, as required under amendments adopted in 2007, will harm consumers and the US economy.

Kelly Stone, a biofuels analyst at ActionAid USA, said, “Over the next decade, [biofuel] mandates will drive a 43% increase in global biofuel demand. The US and the RFS will be responsible for half of that demand growth.”

She warned, “This level of growth will have serious implications for hunger and land rights around the world, compounding the problems we are already seeing from biofuel production.”

Scott Faber, EWG vice-president, government affairs, said the RFS “has not only failed consumers and the environment, it has also failed the advanced biofuel industry it was supposed to help.”

Advanced Biofuels Association (ABFA) Pres. Scott McAdams made a similar point as he addressed participants at the 2015 Advanced Bioeconomy Leadership Conference that same day. He said congressional supporters of the RFS amendments in the 2007 Energy Independence and Security Act were nearly unanimous in believing the ultimate prize was to foster development of advanced and cellulosic biofuel manufacturers which would use nonfood feedstocks to produce next-generation fuels.

‘Only minimally helpful’

“Eight years after its passage, it is easy to see that the RFS may be working for some, but it is only minimally helpful to advance the promise and potential of next-generation renewable fuels,” McAdams said. “We need to acknowledge the simple fact: that the RFS is not equally helpful to all sectors of the biofuels industry.”

He said after working with the US Environmental Protection Agency since 2009 to get pathways and feedstocks approved, and annual volume quotas released on time only to be frequently told by EPA that it did not have sufficient legal authority to get the job done, it has become clear that statutory changes need to be made in the RFS.

In what McAdams said was a policy change for ABFA, the group’s members now want Congress to legislatively amend the RFS. Specifically, he said it would like to see a minimum value established for Research Identification Numbers (RINs), the credits refiners and other obligated parties use when they are not able to secure biofuels to meet their quotas, and index this minimum value to the price of crude oil to provide more support when it drops.

McAdams said Congress also needs to show its support for advanced and cellulosic fuels by making it clear the program extends beyond 2022 to provide sufficient time for the industry to develop. He also called for elimination of what he said is a loophole that allows refiners and blenders to opt out of buying a cellulosic gallon with a biofuel credit with a waiver credit.

Responding to McAdams’s remarks, American Fuel & Petrochemical Manufacturers Pres. Charles T. Drevna said on Mar. 11 that AFPM was heartened by ABFA’s call for Congress to reform the RFS. “However, the association’s proposal does nothing to improve the situation and, in many aspects, it simply adds to further uncertainty, unnecessary costs, and market distortion,” he said.

‘Hard sunset date’

“While ABFA’s position would force the oil industry to finance the cellulosic biofuel industry’s future, consumers also would bear the cost by paying for more expensive fuel,” Drevna said. “Despite ABFA’s claim, the RFS does not end in 2022, it goes on in perpetuity. At a bare minimum, any reform must include a hard sunset date at which time cellulosic fuels must be able to compete in the market.”

Drevna said RINs were never meant to provide subsidies from one industry to another, but are a mechanism to ensure that obligated parties are able to stay in compliance with the law.

The cellulosic waiver which McAdams called a loophole “is in reality one of the few, and certainly the strongest, consumer protection provisions in this broken law,” Drevna said. “The cellulosic waiver credit assures that refiners stay in compliance with the RFS if these phantom fuels are not produced and ensures that consumers aren’t forced to pay $25/gal or more for ‘advanced’ biofuel fuel, as the US Navy currently does.”

He said AFPM joins AFBA in asking Congress to provide a legislative remedy to the RFS’s implementation woes, but believes the biofuels association’s proposals “merely add to the problem rather than fix it.”

US Sens. Dianne Feinstein (D-Calif.), Patrick J. Toomey (R-Pa.), and Jeff Flake (R-Ariz.) introduced legislation to remove the corn ethanol mandate as a way to address the RFS’s problems on Jan. 16 as an amendment to the Keystone XL crude oil pipeline approval then before the Senate (OGJ Online, Jan. 20, 2015). Several federal lawmakers from agricultural states have said the requirement should remain a part of the RFS.

Contact Nick Snow at nicks@pennwell.com.

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