Fuel industry tweak would boost blending infrastructure

Source: By Gene Lucht, Iowa Farmer Today • Posted: Thursday, February 9, 2017

ALTOONA, Iowa — While much of the attention in the ethanol world has been on the levels required by the Renewable Fuels Standard (RFS), one insider topic of discussion recently has been about the point of obligation (POO) for the RFS.

When the RFS was passed, rule makers had to decide where in the production process they would implement the requirements. The decision was made at that time to put the point of obligation at the refinery or the importer of fuel. That is where the renewable identification numbers (RINs) are necessary.

Some in the industry, especially refiners, would like to change that POO and move it downstream in the process.

The topic came up during some of the discussions at the Iowa Renewable Fuels Summit Jan. 31.

The change would speed the building of new blending infrastructure by moving the emphasis to the blender, according to Martin Parrish of Valero Energy.

“It’s a really challenging issue,” said Bob Dinneen, president of the Renewable Fuels Association in Washington, D.C.

Dinneen says most of his RFA members oppose the change, arguing it could damage the RFS and reduce its effectiveness.

“There is concern,” said Iowa Renewable Fuels Association Executive Director Monte Shaw.

Shaw points out that the POO was not set in the statute creating the RFS, so it could be changed through rulemaking without actually changing the RFS.

Shaw and Dinneen said the discussion about the POO could be a big one within the industry and at the federal Environmental Protection Agency in the coming months or years.

In a related discussion at the Jan. 31 summit, Dinneen and other industry leaders said

CAFE (corporate average fuel economy for vehicles) could also be an issue.

The higher CAFE standards put into place by President Barack Obama could be seen as increasing the demand for biofuels. But they could also be seen as encouraging electric and hybrid vehicles, potentially reducing the demand for all fuel, including ethanol.