Hearing fails to find much common ground on RFS reforms

Source: By Marc Heller, E&E News reporter • Posted: Wednesday, October 30, 2019

Illinois Republican Rep. John Shimkus said yesterday he’s trying to save biofuels — not kill them — by weaning the country off the renewable fuel standard’s fuel-blending requirements.

“I think we’re threatened by a changing world,” Shimkus said at a House Energy and Commerce subcommittee hearing, referring to a gradual move toward electric vehicles. “And we’d better get united.”

Shimkus, who’s worked on legislation to create a national octane standard that could boost demand for ethanol, said he’s not sure how long the transition away from liquid-based fuels may take but that finding the right balance between petroleum and biofuel is part of making sure the switch doesn’t happen overnight — an outcome that would hurt both industries.

If the Green New Deal proposed by Democrats becomes law, that transition could happen much faster, he said.

But pro-biofuel witnesses at the hearing sidestepped questions about the move toward EVs, saying any reckoning is far into the future.

The Subcommittee on Environment and Climate Change held the hearing to examine one aspect of the renewable fuel standard: the exemptions EPA grants to small refineries that say they’d face economic hardship if forced to comply.

But the session turned into a broader debate about the RFS, pitting farm groups and ethanol and biodiesel companies against the petroleum industry.

Shimkus — who said he’s retiring from Congress next year but faces pressure from Republican leaders to reconsider and possibly take the top GOP slot on the full committee — said a high-octane fuel standard would drive demand for biofuel without the government setting minimum volumes every year.

Ethanol is the cheapest source of octane, Shimkus said, offering an opportunity to help farmers and let the free market grow the biofuel industry.

“We’re trying to protect the liquid fuels market,” Shimkus told witnesses. “That’s why we need your help.”

Shimkus said he’s been supportive of biofuels over the years, voting for revisions to the renewable fuel standard in 2007 and championing the addition of biodiesel to the federal vehicle fleet in 1998 in one of his first legislative victories.

But the hearing didn’t provide much common ground. The lone witness opposed to the RFS, American Fuel & Petrochemical Manufacturers President and CEO Chet Thompson, took issue with pro-biofuel groups’ assertion that refinery exemptions undercut demand for ethanol, citing U.S. Energy Information Administration estimates that ethanol blending reached 10.17% in July, the highest on record.

Geoff Cooper, president and CEO of the Renewable Fuels Association, said the EIA also reported that ethanol consumption fell last year, which he attributed to small refinery exemptions and the sinking price of renewable fuel credits.

Refineries buy the credits, called renewable identification numbers, as an alternative to blending biofuel. The price of RINs was high in 2016 and 2017, then dropped fast after the Trump administration sharply increased the number of refinery exemptions. Higher RIN prices spur biofuel production, Cooper said.

Cooper and Thompson disagreed on that point, too, with Thompson saying EIA statistics don’t show a correlation between RIN prices and biofuel consumption. High RIN prices just create hardship for refiners and make fuel more expensive for consumers, Thompson said.

The industries are also at odds over how much information EPA should share about which refineries apply for and receive exemptions. Biofuel supporters say EPA is too secretive, providing little detail on how it reaches decisions and declining to reveal which refineries were freed of the requirement.

Legislation proposed by Rep. Collin Peterson (D-Minn.) called the “Renewable Fuel Standard Integrity Act” would require more public disclosure of information on exemption petitions. That bill is H.R. 3006.

Subcommittee Chairman Paul Tonko (D-N.Y.), who called yesterday’s hearing, isn’t a co-sponsor, but 14 House Democrats and 21 Republicans have signed on.

Revealing that information, Thompson said, could make distressed refineries even more distressed by disclosing their economic woes to competitors.

At a minimum, Cooper said, EPA should make public the names, locations and volumes of biofuel attached to each exemption — an idea the agency floated during the Obama administration.

The system now in place gives policymakers no idea which companies are experiencing hardships and why, said Rep. Frank Pallone (D-N.J.). Even lawmakers on the committee can’t obtain that information, he said, adding, “We should be able to find a middle ground.”