As prepared for delivery
Press briefing teleconference RINs issues
Bob Greco, API group director for downstream and industry operations
Thursday, September 27, 2012
Opening statement:
Good afternoon everyone. Thanks for calling in.
We’re holding today’s call because we’ve seen no progress from the administration on fixing problems with the RINs program – and because our concerns regarding structural problems with the Renewable Fuels Standard have, so far, not been addressed.
The oil and natural gas industry supports renewable fuels, and is one of the largest investors in these alternative energy sources. And we support the provisions in the RFS program that allow refiners to purchase RINs or Renewable Identification Numbers to demonstrate compliance. This credit‐purchasing mechanism has the potential to make the RFS program more efficient and keep costs down, which can benefit consumers.
However, both the RFS and the RINs program have significant problems, which remain unresolved despite months of work by EPA and the White House … and it appears increasingly unlikely that the administration will address the issue of fraudulent RINs in time for a solution to be in place before next year.
The RINs program has serious problems because some purchasers of biodiesel RINs have been defrauded by vendors implicitly approved by EPA. The names of the firms were listed on EPA’s website. In fact – as of this morning – the firms are still listed on EPA’s website, even though the owners have already been prosecuted.
The fraudulent sales have involved more than 140 million bogus RINs.
Companies that purchase bad RINs may have to pay fines and replace the bad RINs with good ones. This harms refiners, but it harms others, too. When refiners have to purchase additional RINs, that adds costs to their operations and could hurt consumers. Moreover, the refiners who purchase RINs are now proceeding cautiously. Some may be wary of purchasing them from less well known biodiesel producers, which could penalize these firms and cost jobs.
Ultimately, the fraudulent RINs problem threatens the viability and acceptance of the entire RFS program, but that isn’t the only problem with the program. It has become increasingly unrealistic and unworkable in several ways. A serious blend wall problem exists. The program’s volume requirements threaten to force concentrations of biofuels in gasoline above levels that are compatible with vehicles and fuel dispensing equipment. There is also an unworkable requirement to use cellulosic ethanol in gasoline even though none is commercially available. And the agency has upped the biodiesel volume requirements, above what the statute requires, which will hike refiner costs by hundreds of millions of dollars and could impact consumers.
The RFS program needs an overhaul. That will take congressional action to accomplish. While legislation has been introduced to address the RINs problem so that refiners can begin purchasing RINs credits in 2013 knowing they are valid, EPA could make that unnecessary if it simply got to work and fixed the problem itself.
Thanks, and now I’ll take your questions.