Chairman Carper’s Opening Statement: Hearing on the Renewable Fuel Standard

Source: By Senator Tom Carper, U.S. Senate Committee on Environment and Public Works • Posted: Thursday, February 17, 2022

WASHINGTON, D.C. — Today, the U.S. Senate Committee on Environment and Public Works held a hearing to examine the Renewable Fuel Standard.

Below is the opening statement of Chairman Tom Carper (D-Del.), as prepared for delivery:

“Today, we will examine the Environmental Protection Agency (EPA)’s Renewable Fuel Standard program. This includes management and implementation challenges, as well as opportunities to encourage greater deployment of more sustainable fuels. My staff tells me that our committee has not held an oversight hearing on this topic since 2016.

“To help inform our discussion, we have an expert panel of witnesses joining us today. Thank you all for your participation in this hearing.

“Winston Churchill is credited with saying, ‘The farther backward you can look, the farther forward you can see.’ So let’s take a moment to understand the history of this program and how we got to where we are today.

“In the early 2000s, our nation’s energy future didn’t look all that promising. Americans were consuming more and more gasoline and diesel, and we were increasingly relying on imported oil to fuel this growth. As a result, global oil prices were on the rise without any indication of slowing down, and consumers were paying more at the pump every year.

“At the time, a bipartisan group of us in Congress took several steps to improve our nation’s energy future.

“Among those steps, we created and expanded the Renewable Fuel Standard under the Clean Air Act. Our goals included providing new economic opportunities for our farmers while also lowering our dependence on foreign oil and reducing greenhouse gas emissions from the fuel we burn in our cars and trucks.

“Since the implementation of the program, we’ve come a long way toward achieving our goals. Economic growth in agricultural communities has expanded and our fuels have become significantly cleaner than they were two decades ago. In fact, the Renewable Fuel Standard presents economic and energy opportunities for the people of Delaware and every state in our nation to seize.

“Like many of our colleagues on this committee, I still support the goals of the Renewable Fuel Standard. Having said that, there have been a number of challenges when it comes to the implementation of the program.

“For example, the amount of advanced renewable fuel used today in this country is far less than the 36 billion gallons that Congress mandated in 2007 be used by 2022. That shortfall is partly due to unforeseen market challenges and partly due to EPA’s delay in approving new fuels to enter the marketplace.

“Make no mistake, advanced renewable fuels are being produced that have the potential to replace gasoline, diesel, and jet fuels on a gallon-for-gallon basis in today’s combustion engines with no loss of performance.

“Many of these advanced fuels have already been approved for use in state renewable fuel programs—like in Oregon.

“However, EPA has been slow to make decisions on new advanced biofuel applications and pathways for usage. At the same time, the Clean Air Actprohibits some of the advanced renewable fuels that qualify for state programs from qualifying as renewable fuel under the federal program.

“We must find better ways to allow new advanced renewable fuels to qualify for the Renewable Fuel Standard. Doing so would be good for our environment, help refineries meet their obligations, and further support a growing domestic biofuel industry.

“Another challenge in implementing the Renewable Fuel Standard is the volatility in compliance costs for refiners.

“Years of mismanagement under the previous administration, coupled with the unexpected changes in both fuel supply and demand caused by the pandemic, have collectively wreaked havoc on the program’s compliance market, known as the RIN market.

“What is the RIN market? EPA tracks compliance with the Renewable Fuel Standard by using tradable credits, referred to as renewable identification numbers or RINs. Refiners and importers can generate RINs either by blending biofuels into fuel or by purchasing RINs from another party through what is known as the RIN market.

“The huge price swings in RIN costs—from 30 cents to almost $2 per gallon of renewable fuel in less than two years—have created financial uncertainty for everyone, especially those who are required to comply with the Renewable Fuel Standard. That, in turn, has made it extremely difficult for obligated parties to make forward-thinking investments in producing cleaner fuels. We must help reduce the volatility in compliance costs for this program to be successful.

“As a recovering governor, when exploring ways to improve federal policies, I often look to see what’s working in our states and try to replicate that.

“Many states, like California and Oregon, have implemented technology-neutral low carbon fuel standards.

“These standards have successfully advanced cleaner fuel usage, kept consumer and compliance costs low, all while fostering local clean fuel investment and job creation. As we will hear today, these state programs have fuel flexibilities, long-term predictability, and cost-containment provisions that are not included in the Renewable Fuel Standard today, but perhaps should be.

“In closing, as one of the strongest supporters of electric vehicles in the Senate, I know it’s important to remember that we aren’t yet in a post-liquid fuel world. We must retain our domestic capabilities to produce and refine the motor vehicle fuels that power our lives, while also ensuring that these fuels are as clean as possible in order to meet our climate goals.”

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