EPA Considering Petitions to Change Renewable Fuel Standard Obligation

Source: By JACK FITZPATRICK, Morning Consult • Posted: Friday, June 24, 2016

Environmental Protection Agency Acting Assistant Administrator Janet McCabe told lawmakers Wednesday the agency is considering how it enforces the Renewable Fuel Standard, which requires renewable fuels to be blended into gasoline.

McCabe said in a House Energy and Commerce subcommittee hearing the EPA has received several petitions calling for the agency to switch the burden of compliance off of refiners, adding that the possibility of changing the obligation is “very much on our minds.” McCabe said she didn’t have a timeframe for responding to the petitions but called it an “important issue to look at.”

Refiners have petitioned the EPA to change the point of obligation to blenders, or “the entity that holds title to the gasoline or diesel fuel, immediately prior to the sale from the bulk transfer/terminal system … to a wholesaler, retailer or ultimate consumer.”

Much of the hearing focused on the difficulty of meeting the renewable fuel requirements originally set by Congress, calling for 36 billion gallons of renewable fuels to be blended into the fuel supply by 2022. That goal has become unworkable for two reasons, said Energy Information Administration Deputy Administrator Howard Gruenspecht.

The smaller reason is that gasoline demand hasn’t matched what Congress thought it would be, making the requested total amount of renewables an even higher percentage of the fuel.

The EPA’s 2017 standards use a waiver to set the bar lower than Congress envisioned, calling for 18.8 billion gallons of renewable fuels. But McCabe told the panel it was “consistent with Congress’ clear intent to drive renewable fuel use.”

The bigger reason for the lower bar for renewables, Gruenspecht said, is that RFS supporters hoped to eventually find a way beyond the unofficial 10 percent limit, or “blend wall.” The thinking goes that vehicles can’t handle more than 10 percent of renewables in the fuel supply, although that’s not a hard limit, and the EPA’s 2017 requirement goes slightly beyond 10 percent.

The hope, Gruenspecht said, was that the fuel supply would be able to handle more, experiencing a transformation that hasn’t occurred yet. Supporters were “envisioning something completely beyond that in terms of transformation of the fuel system,” he said.