As prepared for delivery
Press briefing teleconference on RFS program
Bob Greco, API group director, downstream and industry operations
November 27, 2012
Good morning, everyone. Thanks for calling in.
Let me first be clear that our member companies support renewable fuels. They invest in biofuels, and nearly every gallon of gasoline today is blended with biofuels as an effective means to boost octane and help meet environmental requirements. Today, in fact, some 15 billion gallons of biofuels are blended in gasoline and diesel fuel annually.
However, we believe the Renewable Fuels Standard is unworkable and should be repealed. Despite repeated and ongoing efforts to address the program’s shortcomings – through regulatory petitions, legal actions and suggested solutions to implementation concerns – little has been done to make the program workable, and sometimes actions have been taken that make matters worse.
The conclusion, therefore, is that there is a fundamental flaw in the enabling statute so the only way to fix it is to scrap the law and start over if Congress believes such a program is necessary.
The program has many flaws. For example, EPA has required refiners to purchase credits for failing to blend cellulosic ethanol in motor fuel, even though no one makes and sells that special variety of ethanol.
In addition, EPA was unable to address the significant problems created by the issuance of fraudulent RINs in a timely manner, choosing initially to fine refiners for unknowingly buying bogus credits from companies listed on EPA’s website.
The agency also has sanctioned use of E15 blends in vehicles despite the possibility of harm to both vehicles and service station pump equipment – a decision it made before critical studies were completed.
But the biggest issue facing us now, and the reason we need action from Congress, is that we expect to hit the so-called “blend wall” as early as next year. The blend wall is what we will confront when the amount of ethanol required to be blended under the RFS will exceed the ability of the vehicle fleet to safely use these blends.
We are now taking a closer look at how the blend wall could impact consumers and will provide some additional information soon.
The other critical reality is that the RFS program was enacted at a time when our nation’s energy landscape was far different. With the current boom in domestic oil and natural gas development, we are steadily reducing our foreign energy dependence, well beyond what the RFS program has achieved. Also, the increasing use of affordable, plentiful domestic natural gas supplies has helped drive a decline in greenhouse gas emissions. The notion that we need a Renewable Fuels Standard to promote energy independence and security, as the 2007 statute is named, has been turned on its head by the tremendous growth in domestic oil and natural gas.
The blending of biofuels in gasoline will continue even without an RFS program to enhance octane, to help meet environmental requirements, and to meet consumer demand. The fact is we’re now producing so much ethanol that we will likely continue to see more of it exported to overseas markets.
So after careful consideration, we are joining the wide variety of stakeholders – from farm groups and the food industry to environmental NGOs – in sounding the alarm bell about the RFS, and we are calling on Congress to repeal the RFS program and allow us to truly pursue a path toward energy security.
Thank you, and now I’d be happy to take your questions.