RFS proposal is ‘only helping the oil companies’ — industry leaders 

Source: Ben Panko, E&E reporter • Posted: Friday, June 12, 2015

Renewable fuels industry leaders are calling for U.S. EPA to increase the mandated percentage of biofuel production in its latest proposal for the renewable fuel standard.

“We strongly believe EPA needs to scrap this proposal and get the RFS back on track,” Bob Dinneen, president and CEO of the Renewable Fuels Association, an industry trade group, said in a conference call with reporters today.

The leaders focused on an EPA memo released last month that showed that fluctuations in the prices of the renewable identification numbers (RINs) traded among biofuels producers do not have any tangible effect on gasoline prices that consumers pay. RINs function in a way similar to emissions credits, in that fuel producers can either produce their renewable volume obligation or purchase RINs from other producers to comply with the RFS. Spiking prices of RINs in 2013 sparked fears that a “blend wall” was being reached, because EPA was requiring greater than 10 percent of fuel produced to be ethanol for the first time. Companies started buying up RINs to stockpile them for future years in case they couldn’t meet the higher production requirements (Greenwire, March 13, 2013).

“While RIN prices were significantly higher in 2013 than in previous years, we did not see, nor would we expect to see, a corresponding net increase in the overall retail price of transportation fuels across the entire fuel pool,” Dallas Burkholder of the EPA Office of Transportation and Air Quality wrote in the memo.

In its proposal for the RFS for 2014, 2015 and 2016 released on May 29, EPA reduced the biofuels percentage required to well below 10 percent for the first two years and just below 10 percent for 2016, largely in response to fears that higher standards would create market scarcity and force fuel prices higher (Greenwire, June 3).

“Due to constraints in the fuel market to accommodate increasing volumes of ethanol, along with limits on the availability of non-ethanol renewable fuels, the volume targets specified by Congress in the Clean Air Act for 2014, 2015 and 2016 cannot be achieved,” EPA said in a statement accompanying the proposal.

Lowering the standards creates a surplus of RINs in the market, the industry leaders said, driving down RIN prices and encouraging fuel producers to simply purchase RINs instead of developing infrastructure to produce biofuels on their own.

“Unfortunately, the agency seems to have a bad case of schizophrenia,” said Geoff Cooper, senior vice president of the Renewable Fuels Association, referring to EPA’s decision to move forward with a reduced RFS despite its own assessment showing that higher renewable volume obligations did not hurt consumers.

“They’re only helping the oil companies by doing this,” Dinneen said.