Governor Wolf asks Trump for RFS waiver, RFA responds

Source: By Erin Voegele, Ethanol Producer Magazine • Posted: Tuesday, October 31, 2017

Pennsylvania Gov. Tom Wolf recently asked President Donald Trump to waive the Renewable Fuel Standard renewable volume obligations (RVOs) for Northeast refiners, citing high renewable identification number (RIN) prices.

Wolf sent a letter to Trump on Oct. 20 outlining the request. Within the letter, Wolf said expressed concern that high RIN prices are undermining the viability of the oil refining sector in the Northeast. The letter specifically names Philadelphia Energy Solutions and Monroe Energy as refiners that have been impacted by RIN prices.

He goes on to argue that the U.S. EPA has the legal authority to waive RVOs if the administrator determines that implementation of the requirement would severely harm a state or regional economy, or severely impact the U.S. economy. “By this letter, I specifically request that you ask [EPA Administrator Scott Pruitt] to waive the renewable volume obligation for Northeast refiners until or unless the market prices deflate,” Wolf wrote.

The Renewable Fuels Association has spoken out in response to Wolf’s letter. “Numerous studies—including some funded by the oil industry—show that merchant refiners recover their RIN costs at the wholesale level, while retail gasoline prices are unaffected by RINs,” said Bob Dinneen, president and CEO of the RFA. “However, even if a refiner could show that RINs truly represent a cost that is not recouped, it could not demonstrate ‘severe harm’ to the economy.”

“That’s because the Pennsylvania governor’s RFS waiver request doesn’t meet the very high threshold required by the statute and previously utilized by EPA in responding to similar requests,” he continued.  “Section 211(o)(7) of the Clean Air Act allows a waiver if the EPA Administrator determines that implementation of the RFS requirements would severely harm the economy of a state, a region or the United States. Further, for a waiver to be granted, EPA must find that implementation of the RFS itself would severely harm the economy, not just contribute to such harm on one sector of the economy.”

“By any measure, the RFS has actually helped, not harmed, the economy,” Dinneen said. “Since 2005 when the RFS was initially enacted, U.S. ethanol industry jobs grew 121 percent to 339,176 in 2016, and the value of the industry’s output quadrupled to $32.8 billion last year. Meantime, ethanol is currently priced below petroleum, and the RFS allows consumers to take advantage of the cleanest, lowest cost and highest-octane fuel on the planet.”

“Additionally, despite concerns outlined by the governor’s waiver request, the prices of RIN credits used for RFS compliance have not caused changes in retail gasoline prices, according to a recently released analysis by Informa Agribusiness Consulting.

“The primary driver behind this waiver request is Philadelphia Energy Solutions (PES), owner and operator of the oldest refinery in the nation,” Dinneen continued. “It is not the fault of the RFS or RINs that PES can’t compete with newer, more efficient refineries that have better access to lower-priced, lighter crude oil sources. PES could entirely eliminate its RIN costs by investing in ethanol blending infrastructure—as other merchant refiners have done—rather than continuing to throw good money after bad in a PR and legal crusade against the RFS.”