Bob Greco's remarks at press briefing on 2014 RFS mandate

Press briefing on 2014 RFS mandate
Bob Greco, API downstream group director
October 2, 2014

Opening statement, as prepared for delivery

Good morning, and thank you for joining the call.

API is very concerned with how this administration is playing politics with the Renewable Fuel Standard (or RFS), one of the most far-reaching energy policies on the books.

Signals from the White House in meetings and conversations indicate the administration is considering raising the mandated amount of biofuels that must be used by consumers THIS year.

Never mind that the year is nearly over and refiners can’t retroactively put more ethanol into gasoline.

Never mind that higher ethanol mandates could require more ethanol than is safe for most cars on the road today.

Studies show raising ethanol mandates could raise gasoline and diesel costs, hurt our economy, damage engines, and void auto warranties.

And never mind that traditional allies of this administration like environmental groups and anti-hunger groups want corn ethanol mandates scrapped because they damage the environment and raise food costs.

No, it seems the White House is focused on one goal – keeping control of the Senate after next month’s election.

Namely, they want to give cover to the Democrat running neck and neck with his opponent in the Iowa Senate race.

But raising ethanol mandates could force us through the 10 percent ethanol blend wall – the point at which the government mandates more ethanol than refiners can safely squeeze into gasoline.

It could also force refiners to stop selling gasoline without ethanol, even though consumers are voting for ethanol-free gas with their wallets.

In fact, non-ethanol gasoline has recently grown to 5 percent of gasoline demand while demand for E85 is just 0.15 percent.

That shouldn’t be surprising, because many consumers prefer non-ethanol gasoline for small engines and marine engines.

That includes farmers in Iowa, by the way, who want non-ethanol gasoline for their equipment.

And consumers choose E0 because you can go farther on a gallon of gasoline without ethanol.

For the sake of consumers, and for the sake of our economy, we call on the administration to keep ethanol mandates well below 10 percent of gasoline demand.

That will temporarily fix the ethanol blend wall and allow retailers to carry some non-ethanol gasoline for farmers and other consumers who demand it.

But we have several other concerns with the direction the administration is taking on the RFS.

First, we’re concerned the administration is considering an increase to the biomass-based diesel standard for the 2014 compliance year.

We recently reminded EPA in a letter that increasing the biomass-based diesel mandate for the 2014 compliance year is prohibited by law.

The Clean Air Act expressly compels EPA to provide a 14-month lead time when modifying the mandate. EPA was required to have finalized any increase to the 2014 biomass-based diesel mandate by October 31, 2012.

Congress established the statutory deadline for a reason. It provides sufficient notice for refiners to make the necessary operational, logistical, and investment decisions to meet any increase in the biomass-based diesel mandate.

Second, in a move that went largely unnoticed, the administration recently changed the definition of what it considers to be cellulosic biofuels.

Biogas and gas captured from landfills that six months ago didn’t count as cellulosic biofuel now qualify under EPA’s expanded definition.

So EPA is essentially inflating cellulosic fuel production -- putting a thumb on the scale -- so the numbers are more in line with their prediction of high cellulosic production this year.

In reality, they’ve just re-categorized an existing type of fuel, which is not adding to the amount of cellulosic biofuel that is actually available.

EPA shouldn’t use these inflated numbers to raise the cellulosic mandate for this year.

In closing, the White House is now in the last stages of finalizing the 2014 requirements after multiple delays that have become embarrassingly common when it comes to implementing the RFS under this administration.

API will continue pressing the administration not to raise ethanol requirements.

We’re running a TV, radio, and digital ad campaign asking the White House not to play politics with the RFS.

We’re mobilizing our 23 million + grassroots network to call the White House and voice their concerns.

We’re giving the administration everything they need to make the right choice for consumers and for our economy.

And we expect them to do just that.

Thank you, and I’d be happy to take any questions you have.