Bipartisan Policy Center’s McKee discusses options for reforming RFS 

Source: Monica Trauzzi, E&E • Posted: Tuesday, January 6, 2015

Following repeated delays by U.S. EPA to set its yearly renewable fuel standard targets, a group of stakeholders with wide-ranging perspectives on the RFS was convened by the Bipartisan Policy Center to devise a set of policy options for reforming the rule. During today’s OnPoint, Scott McKee, senior policy analyst at the Bipartisan Policy Center, explains why he believes the RFS should not be repealed and discusses the options lawmakers and the Obama administration have for improving the rule.

Click here to watch today’s OnPoint.

Monica Trauzzi: Hi. Welcome to OnPoint. I’m Monica Trauzzi. Today with me is Scott McKee, a senior policy analyst at the Bipartisan Policy Center. Scott, thanks for coming on the show.

Scott McKee: Thanks for having me!

Monica Trauzzi: Scott, following repeated delays by EPA to set its yearly renewable fuel standard targets, BPC recently released a set of policy options for reforming the RFS. Which stakeholders did you bring together to come up with these policy options?

Scott McKee: Yeah. So, we launched this about a year ago. And we really wanted to bring together a diverse set of stakeholders to discuss different options to reform, but not repeal, the renewable fuel standard. So, really, we looked across the gamut of everyone who had a stake for the renewable fuel standard, both from the oil side and from the biofuel side as well as everyone in the middle, as well. So, we had academia, environmental groups, scientists; all those types of groups, as well.

But, we did limit the participants, in terms of just focusing on those who wanted to discuss options for reforming the renewable fuel standard. So, we did end up cutting out those who wanted to either repeal it totally or who wanted to leave it exactly as it was.

Monica Trauzzi: Refiners and some of the oil industry, in particular, would like to see the rule repealed. So, why shouldn’t it be — EPA itself has had difficulty meeting time lines and setting the targets. So, why did you want to eliminate those people?

Scott McKee: Yeah. So, we feel like the program, since it was created in 2005 and expanded in 2007, has really had a lot of successes. So, biofuels production has really ramped up, dramatically, over the past several years. Although, there have been implementation challenges. So, given those challenges, we really wanted to find the — some middle ground options for making a stronger renewable fuel standard that could create policy certainty and stability, to be a long-lasting program.

Monica Trauzzi: One of the suggestions is to increase funding for EPA. How should EPA be changing its process? Which options does the agency have to refine and improve the way it’s going about things? And, how would an increase in funding help them do that?

Scott McKee: Right. So, all of our options — we looked at both the regulatory and legislative options. So, like you said, a whole host of them focus on the regulatory side on how EPA could improve things. So, like you said, one thing is resources. But, a lot of things are creating more explicit methodologies for how they do things, both in terms of their annual rulemaking, but also in terms of all the waiver authorities that they have, and, really, giving more certainty for stakeholders, throughout the process.

Monica Trauzzi: Why doesn’t that currently exist? I mean, shouldn’t there be explicit methodologies already written into the rule?

Scott McKee: Right. So I think whenever Congress set out to create the legislation, they tried to build in a lot of flexibility for a changing landscape. And, in doing so, gave EPA a lot of authority to deal with things. And, as the energy landscape has shifted over the years, since the law was created, it really did create a need to revisit how they approach the RFS. And I think they’re doing that; I think if you listen to what they’re doing, they’re wanting to set up a more strict methodology that could be seen as providing more certainty.

Monica Trauzzi: You have a series of policy — or, sorry — production options. What are the limitations that currently exist on production that you think need to be addressed?

Scott McKee: Right. So, a lot of those, especially, focus on advanced biofuels and really getting investment for those advanced biofuels producers. So, part of this was bad timing; this hit during — while — the recession was hitting. So, that really hurt funding. And then a lot of it is certainty. So, they need policy certainty so they that they can build out and show investors, “Look! We have this financing that makes sense from a 10-year point of view.” So, we really need that policy stability to get that to those producers and investors.

Monica Trauzzi: So, what are the salvageable elements of the current policy that you feel are critical to maintaining?

Scott McKee: So, I think the basic structure of the RFS is really good. So, I think a lot of our options make tweaks around the edges. But, really, the foundation of having a mandate that gives an obligation on refiners but then has some type of stability for those producers so that they know that they have a market; especially to penetrate into a market that is so heavily reliant on one fuel, currently.

Monica Trauzzi: So, you would take issue with folks in Congress in particular who say, “It’s a broken system, it’s a broken rule”?

Scott McKee: Right. I think so. And I think if you look at a lot of the policy objectives that were used whenever they first created the rule — the environmental side, the energy security and rule development and economic development — a lot of those still exist now. So we still need a program to exist for those same goals.

Monica Trauzzi: So, what do you think the political landscape is for the RFS, as we head into 2015, in a Republican-controlled Congress?

Scott McKee: Yeah. So, I think, for Congress, they’re definitely going to be revisiting this with EPA’s continued delay of the 2014 rule. And as they figure out what they’re going to do, going forward, I think that’s going to put a lot of pressure on Congress to figure out what they want to do. Since this issue is so complex, I don’t know how far they’re going to actually get. I think they’re definitely going to have discussion, they might have some hearings. It will be interesting to see if they can put together real legislation in the short time period that they have to be constructive.

But we’re also focusing on the regulatory side as well. So we’re definitely going to be pushing the administration to look at a bunch of these options for improving the renewable fuel standard.

Monica Trauzzi: So, what does your 2015 look like, in terms of how you hope to take these options and spread them around?

Scott McKee: Right. So this is why we wanted to release the report at the end of the year; so that next year we can really hit the ground running, both in terms of Congress and the administration. So our big thing is doing meetings to do education and really walking them through what are — why we did this, how we did it, what are the different options. And then — of our inventory — it actually does walk through each option and explains the advantages and disadvantages of each one. So, working with stakeholders and in Congress and with the regulators to go through and figure out which options work best with their policy objectives.

Monica Trauzzi: All right. Very interesting. We’re going to end it there. Thank you for coming on the show.

Scott McKee: Thank you for having me!

Monica Trauzzi: And thanks for watching. We’ll see you back here tomorrow.