E15 Announcement Expected Oct. 9

Source: By Todd Neeley, DTN/Progressive Farmer • Posted: Monday, October 1, 2018

API Says Deal Unacceptable; Petroleum Interests Continue to Call for Renewable Fuel Standard Reform

OMAHA (DTN) — The White House is reportedly considering a grand deal that includes approval of year-round E15 sales in exchange for restrictions on the biofuels credits’ market, but petroleum interests say it won’t be acceptable.

During a press call on Friday, a spokesman for the American Petroleum Institute said if EPA sets restrictions on how long and how many renewable identification numbers, or RINs, can be held by traders to create more liquidity in the market in exchange for E15, it would be a non-starter.

Politico reported on Friday that President Donald Trump is expected to announce the granting of an E15 waiver during a trip to Council Bluffs, Iowa, on Oct. 9.

API Downstream Group Director Frank Macchiarola said if the EPA grants the waiver for E15, the API and others will “keep all of our legal options on the table. We will respond very strongly.

“This is a difficult program. The only way to fix a difficult program is through legislation that fixes the difficult program.”

Macchiarola said EPA is not serving Trump well in portraying E15 approval as a good deal for both ethanol and petroleum interests. In addition, his group said he believes EPA does not have the legal authority to grant an E15 waiver, according to the Clean Air Act.

“First, the E15 waiver is a flawed, anti-consumer policy,” Macchiarola said. “Auto industry studies have shown E15 can damage vehicle engines and fuel systems, potentially leaving consumers on the hook for expensive repair bills. In fact, three out of four vehicles on the road today were not designed for E15.”Rachel Ganz, communications director for the Renewable Fuels Association, told DTN that most vehicles on the road are safe to use E15.

“E15 is approved for 90% of the cars on the road today,” she said in an email.

“E15 is not approved for small engines and in the more than seven years since it was approved, there hasn’t been a single reported case of consumer misfueling or engine damage with E15. Also, something to keep in mind, there’s no E15 mandate. We are asking EPA to allow consumers year-round access to E15. There’s no mandate.”

Green Plains Inc. Chief Executive Officer Todd Becker told DTN in a recent interview that at least 10,000 stations would sell E15 if it is granted a waiver.

As a result of EPA granting 49 small refinery waivers totaling 2.25 billion gallons of biofuels in 2016 and 2017, the price of RINs has fallen dramatically as more RINs flooded the market. This has reduced the costs of the Renewable Fuel Standard to refiners and other obligated parties.

Earlier this year, East Coast refiner Philadelphia Energy Solutions claimed $832 million in RIN costs led to the company’s Chapter 11 bankruptcy filing. The company eventually reached a settlement with EPA, allowing the company to save millions in RINs costs.

Macchiarola said API and other petroleum interests continue to push for reform to the RFS, including allowing the program to sunset in 2022.

For years beyond 2022, the RFS law requires volumes to be determined by the EPA, along with the U.S. secretaries of agriculture and energy.

“This decision could potentially destroy any opportunity at consensus, bipartisan reform,” he said.

“Lawmakers on both sides of the aisle agree that this broken program needs to be fixed. The president agrees that this broken program needs to be fixed. However, this so-called deal from the EPA does nothing to fix this program, and only makes the RFS’ RIN requirements even more burdensome for refiners. It arguably makes it worse and certainly makes it more difficult to achieve consensus RFS reform that is lasting and meaningful.”