Uncertainty surrounds Cruz proposal on credits

Source: Marc Heller, E&E News reporter • Posted: Monday, December 18, 2017

Iowa’s senators said they were in the dark about a reported proposal by Sen. Ted Cruz (R-Texas) to cap prices on renewable fuel credits, an idea that faces stiff opposition from ethanol producers.

Aides for Sens. Chuck Grassley and Joni Ernst, both Iowa Republicans, said their offices hadn’t seen any proposals from Cruz, despite a report by Reuters that the Texas Republican submitted ideas to corn-state lawmakers and the White House.

“We have not received a proposal from Senator Cruz,” said a spokeswoman for Ernst, Leigh Claffey.

The Reuters report said Cruz proposed a 10-cent cap on the price of renewable fuel credits, also known as renewable identification numbers, or RINs.

That matches a long-term average of RIN prices since the federal renewable fuel standard was enacted in 2005 and updated in 2007, said an energy lawyer familiar with the program.

Cruz’s office didn’t immediately respond to a message seeking comment. The senator has promised to put forth a “win-win” proposal that would ease the cost of renewable fuel credits to refiners without cutting into production of corn ethanol.

Refiners and biofuel supporters are on opposite sides of the price cap issue. The energy lawyer said price controls must be part of any solution. A cap of a dime, he said, “would be generous.”

Cruz’s idea appears to allow for U.S. EPA to sell renewable fuel credits that the market fails to produce, which would generate revenue that could be used to build out biofuel blending infrastructure, the lawyer said.

“A proposal at a lower rate for RINs coupled with additional resources being targeted at biofuel infrastructure build-out seems to meet the definition of a promised win-win,” he said.

Cruz has said RIN prices, which recently have been around 75 cents each, have climbed high enough to put some refiners in financial peril.

The Renewable Fuels Association, representing ethanol producers, has called RIN price caps a “non-starter,” although the organization has been open to making the RIN market more transparent, possibly by oversight from the Commodity Futures Trading Commission.

Another element of Cruz’s proposal, Reuters reported, is convening a task force of administration officials, lawmakers and stakeholders to examine further reforms to the RFS, which mandates biofuel levels in the nation’s fuel supply.

Biofuel groups reiterated the opposition to price controls. Growth Energy CEO Emily Skor in a statement said, “No one is going to accept gimmicks designed to slow the growth of homegrown fuel.”