Reconsider a Bad Deal on the RFS

Mark Green
Posted September 28, 2018

As President Trump has weighed the broken Renewable Fuel Standard (RFS) and its mandates for ever-increasing ethanol use, he asked EPA for a deal that works for all stakeholders and protects consumers.

Unfortunately, he didn’t get one.

In the current push to facilitate year-round sales of E15 gasoline, which contains 50 percent more ethanol than the E10 fuel that’s standard nationally, EPA is serving up a deal that’s lopsidedly unfavorable to the nation’s refiners and does nothing to protect consumers.

EPA’s deal involves an extension to the one-pound Reid Vapor Pressure (RVP) waiver to E15 fuel, coupled with potentially problematic changes to Renewable Identification Number (RIN) market trading. RINs are credits refiners receive for blending ethanol into gasoline, in compliance with the RFS. During a conference call with reporters, API’s Frank Macchiarola, director of downstream and industry operations, said the deal isn’t fair:

“The administration has signaled its push for more E15 could also include potential limits on the RINs market to benefit refiners for a so called ‘win-win’ deal. This was never a deal to begin with and it’s not a win for industry – and it’s certainly not a win for consumers. We do not view this as a fair exchange at all. RIN limits may hamper market liquidity, and in no way compares to the significance of allowing more incompatible fuel into the marketplace.”

Macchiarola said EPA extending the RVP waiver to E15 is explicitly not allowed under the Clean Air Act and could foil any chance for consensus, bipartisan RFS reform:

“Lawmakers on both sides of the aisle agree that this program (RFS) is broken and needs to be fixed. The president agrees that this broken program needs to be fixed. However, this so-called deal from the EPA does nothing to fix this program and only makes the RFS’ RIN requirements even more burdensome for refiners. It arguably makes things worse and certainly makes more difficult the goal of achieving consensus RFS reform that is lasting and meaningful.”

Still looming are the risks to consumers posed by E15 – to owners of vehicles that weren’t designed to use it, including potential damage to engines and fuel systems. About three out of four vehicles on the road today weren’t designed to use E15:

This is critically important when you consider that the average lifespan of a household vehicle is about 11 years:

Also at risk: owners of motorcycles, ATVs, boats and outdoor power equipment.

The RFS should be repealed or significantly overhauled legislatively. Any fix should include sunsetting the RFS by 2022, because the chief mission of the program – to reduce crude oil imports – has been largely achieved through surging domestic oil production. The energy landscape has radically changed since the RFS was created more than a decade ago.

In the absence of a legislative fix, administrative options are available, such as preventing a breach of the refining “blend wall” by keeping ethanol content in the national fuel supply under 10 percent and by ensuring vehicles and fuel infrastructure are compatible with higher ethanol blends.

EPA and the president should listen to consumers and protect them by reconsidering an ill-advised decision. Macchiarola:

“We continue to ask the EPA to put consumers first and to warn consumers about this potentially harmful decision. With this so-called deal, the EPA would be giving away the store to the ethanol lobby and sticking the American consumer with the tab. The president has asked the EPA to give him a ‘win-win’ deal on the RFS, but the so-called deal that EPA has given him is a loser.”