Oil industry counters EPA renewable fuel reform plan

Source: Marc Heller, E&E News reporter • Posted: Wednesday, February 27, 2019

Changes EPA is considering for renewable fuel credits could only worsen flaws in the nation’s biofuel mandate, a lobbying group for the petroleum industry said today.

The American Petroleum Institute said a study it commissioned suggests that tinkering with the system of Renewable Identification Numbers, or RINs, isn’t necessary and could increase fuel costs.

“RIN reform does nothing to solve the fundamental problem,” said Frank Macchiarola, vice president of downstream and industry operations for the API, on a conference call with reporters.

To API, the fatal flaw in the renewable fuel standard is the rising volumes of ethanol the government requires to be added to the nation’s fuel supply. The requirement compels refiners to either blend biofuel or buy the credits to show compliance, sometimes at costs they say are exorbitant.

API said its analysis shows that refined product prices already reflect the cost of renewable fuel credits, reinforcing an earlier finding by EPA.

The agency, however, is crafting regulations that could pave the way to changes in the RIN system, as well as expanding availability of fuel that contains 15 percent ethanol. The RIN changes under consideration include limiting participation in the RIN market to companies that actually have to meet the RFS requirements and requiring public disclosure when an individual holds a number of RINs above a certain limit.

Macchiarola said EPA’s direction is misguided.

“In fact, reforming the RINs market will exacerbate the already broken fuels mandate — the Renewable Fuels Standard (RFS) — which is costly and unnecessary for U.S. consumers,” Macchiarola said in a news release.

In proposing changes to RINs, EPA has said it’s responding to industry complaints about lack of transparency. That’s also been a complaint from the ethanol industry, but API said EPA has already taken good steps toward addressing that issue by establishing an online database of RIN prices, for instance, and by stepping up the fight against RIN fraud.

EPA has said it will propose both the RIN changes and the E15 regulations together, in time for E15 sales this summer. The API opposes both elements, while ethanol groups have urged the agency to concentrate on E15 and leave RIN reform for a separate measure.