Oil-and-gas lobby: Repeal of biofuel rule a top priority in next Congress

Source: By Zack Colman, The Hill • Posted: Wednesday, November 28, 2012

A top oil-and-gas lobby is changing strategy and will press Congress to repeal a biofuel production mandate instead of pushing for piecemeal changes to the rule.

The American Petroleum Institute (API) said Tuesday it believes the Renewable Fuel Standard should not be preserved, saying it is too hobbled by nagging problems.

Bob Greco, API downstream group director, told The Hill that axing the rule “is going to be one of our top priorities next year, and we are going to be bringing our resources to bear.”

But API — which historically has donated to and received support from Republican lawmakers — might encounter some resistance in the House Energy and Commerce Committee.

Earlier this month, Energy and Power subcommittee Chairman Ed Whitfield (R-Ky.), whose subcommittee held a hearing on the matter in July, said he does not expect any changes to the rule.

The rule requires refiners to blend 36 billion gallons of biofuel into traditional transportation fuel by 2022.

At present, corn-based ethanol dominates the market, though “advanced” biofuels made from non-edible feedstock are supposed to comprise 21 billion gallons of the mandate by 2022.

The global recession slowed investment in those “advanced” biofuels, industry groups say. They contend those facilities are just starting to reach commercial production levels, and that changing the rule would spook investors in those technologies as the industry matures.

The biofuels industry also says the mandate has helped create jobs in rural America. It charges that API’s goal in tearing down the biofuel rule is to preserve the gasoline market for petroleum producers.

“Special interests will stop at nothing to discredit the success of renewable fuels created right here at home to ensure their lock on the fuels market goes unchecked,” Tom Buis, CEO of biofuel trade group Growth Energy, said in a Tuesday statement. “They continue to protect the status quo, ensuring our addiction to foreign oil and preventing consumers a choice at the pump.”

But Greco said the rule is beyond mending. He said the current lack of “advanced” biofuels, a changing energy landscape with new domestic gas and oil plays and the emergence of fraudulent renewable fuel credits associated with the mandate all point to endemic problems.

API also is concerned about a so-called “blend wall,” Greco said.

API and domestic automakers worry refiners will have to blend fuels with a higher concentration of biofuels. Most automobiles, they contend, are not designed to handle those higher levels and are not covered under warranties.

The Environmental Protection Agency (EPA), however, has ruled cars made in 2001 or later can use fuels with a 15 percent biofuel concentration, rather than the standard 10 percent. And some newer car models can now handle the greater biofuel concentration.

Greco said API is setting up meetings with newly-elected lawmakers to gain support for repeal.

Greco also said API would reach out to the more than 150 legislators who urged the EPA to issue a one-year waiver to the rule in response to this year’s drought.

Those lawmakers, along with meat and poultry producers, argued the rule choked off corn supplies and raised prices on animal feed.

EPA denied the waiver request from several state governors earlier this month. It agreed with the biofuels community, saying the drought — not the biofuel rule — was responsible for any economic damage incurred.

“We’re going to be urging Congress to move quickly. We think there is interest — the drought highlighted that,” Greco said.