Bipartisan Lawmakers Introduce Bill to Repeal U.S. Ethanol Law

Source: By Mario Parker & Derek Wallbank - Apr 10, 2013 3:45 PM CT • Posted: Thursday, April 11, 2013

Legislation introduced today in the U.S. House of Representatives would repeal requirements for ethanol use, possibly rekindling the debate over the biofuel’s place in the nation’s energy plans.

Representative Bob Goodlatte, a Virginia Republican, and a bipartisan group of legislators introduced two bills. The first would repeal the U.S. ethanol mandate and the second would revise the definition of renewable fuels to include only advanced biofuels and exclude corn-based ethanol, Goodlatte’s office said.

The Renewable Fuels Standard passed in 2007 started out with good intentions and turned out to be a “very dumb” idea, said Representative Peter Welch, a Vermont Democrat, who said the mandate has raised costs for dairy farmers in his state.

Ethanol advocates including Jeff Broin, chairman of Poet LLC, blamed the oil industry for the new attempt to repeal the RFS, which requires the U.S. to use 13.8 billion gallons of ethanol this year and 15 billion gallons by 2015. Broin described the legislation as a desperate “Hail Mary” attempt by oil companies to eliminate a competitive fuel.

“This is just a smokescreen for going after the one alternative fuel and the one policy that has fundamentally disrupted oil industry control of the marketplace while saving consumers money at the pump,” Bob Dinneen, president of the Renewable Fuels Association, a Washington-based trade group, said in an e-mailed statement.

RFS Impact

The American Fuel & Petrochemical Manufacturers and the American Petroleum Institute, which both represent Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX), released statements supporting the legislation.

Ethanol, petroleum and food interests have argued about the impact of the RFS, which calls for escalating amounts of the fuel to be used, on grocery and fuel costs. The mandate was part of U.S. energy plans to reduce dependence on foreign sources of crude oil.

Compliance is tracked by Renewable Identification Numbers, or RINs, which are attached to each gallon of biofuel produced or imported. Once refiners blend the biofuel into petroleum, they can retain the RIN or trade it to another party.

The value of corn-based ethanol RINs fell 11.5 cents to 80 cents today, data compiled by Bloomberg show. Advanced RINs dropped 10 cents to 85 cents. They both reached records on March 8.

There are about 2.1 billion RINs that were carried over from 2012 that can be used for compliance this year, short of the Environmental Protection Agency’s forecast of 2.6 billion, Goldman Sachs Group Inc. said in a April 7 report.

Higher prices for the certificates may affect prices for reformulated gasoline, or RBOB, and crack spreads, the premium of the fuel over crude, Goldman Sachs said.

To contact the reporters on this story: Mario Parker in Chicago at and Derek Wallbank in Washington at +1-