Expected RFS Tweaks Likely Will Make Flawed Program Worse
Posted September 3, 2019
The story of the federal Renewable Fuel Standard (RFS) is long and unfortunate – a program that is now largely obsolete thanks to surging domestic energy, whose mandates continue to loom over American consumers without many of the benefits it was supposed to provide. It lives on, protected by ethanol producers and corn state/presidential politics.
That’s the context for RFS policy tweaks expected soon from the White House – more fiddling with a flawed program that will attempt to force higher content of ethanol-blended fuel into the U.S. supply, potentially impacting consumers, while creating an uneven playing field in the refining sector.
Earlier this year the administration granted 31 Small Refinery Exemptions – temporary exemptions from annual RFS renewable fuel obligations, causing an uproar in farm states. In response, the White House is expected to increase required 2020 conventional ethanol volumes by 500 million gallons and 2021 biodiesel volumes by 250 million gallons. It’s bad policy for these reasons:
- The RFS will continue to threaten a breach of the “ethanol blend wall,” which refers to the amount of ethanol than can safely be blended into the nation’s fuel supply at E10 gasoline. Requiring more ethanol that can be absorbed into E10 fuel could force more E15 gasoline into the marketplace, further putting consumers at risk for vehicle repairs and damage to equipment not designed to use E15.
- The RFS is a burden on all refiners regardless of size, so reallocating the ethanol obligations of the small refiners to others isn’t fair. Non-exempt refineries that are complying with the RFS shouldn’t have their ethanol obligation increased. Rather, the exempted volumes should be subtracted from the RFS’ overall requirements. Simply shifting those volumes to non-exempt refiners puts additional pressure on the ethanol blend wall and, again, poses more risk for consumers.
API’s Patrick Kelly, testifying at a recent RFS public hearing in Michigan, said reallocating small refinery obligations punishes complying parties. Kelly said increasing the ethanol mandate above 10% does not equate to more ethanol consumption, because the primary impediments to broader use of E15 remain – nearly 70% of vehicles on the road today weren’t designed to use E15, and E15 isn’t compatible with much of the retail fueling industry’s equipment and infrastructure.
“The increases in gasoline demand projected at the inception of the RFS2 in 2007 did not materialize, nor did the commercialization of cellulosic biofuels. The ethanol blend wall is a real constraint on the fuel supply system that will limit the use of ethanol for the foreseeable future. Serious vehicle and retail infrastructure compatibility issues continue to exist with gasoline containing more than 10 percent ethanol.”
Frank Macchiarola, API vice president for downstream and industry operations:
“This rushed, arbitrary policy pushes us further toward E-15, a fuel that nearly 70 percent of vehicles on the road today were not to designed to run on. We hope the Administration walks back from the brink of a disastrous political decision that punishes American drivers. Bad policy is bad politics.”
The administration’s expected moves are steps in the wrong direction on the RFS. Complying refiners shouldn’t be made to pick up ethanol volumes from exempted refiners. The RFS, which continues to put consumers at risk, needs a comprehensive overhaul, not more tweaks that make a bad program worse.
About The Author
Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Previously, Mark was a reporter, copy editor and sports editor at an assortment of newspapers. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela have two grown children and four grandchildren.
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