Biofuel Trade Groups Discuss RFS Rulemaking, Announce Ad Campaign

Ethanol Producer Magazine

May 12, 2015

By Erin Voegele

On May 12, representatives of two biofuel trade organizations discussed the choice the White House and U.S. EPA face in proposing upcoming renewable volume requirements (RVOs) under the renewable fuel standard.

Bob Dinneen, president and CEO of the Renewable Fuels Association, kicked of the media call by discussing a letter the American Petroleum Institute and American Fuel & Petrochemical Manufacturers issued to the EPA earlier this month advocating for the agency to continue using the flawed methodology contained in the original 2014 RVO proposed rule. The RFA was among a group of 10 biofuel trade associations and companies that sent a letter EPA Administrator Gina McCarthy last week in response to the API/AFPM statement.

During the call, Dinneen noted that the heart of the controversy around the EPA’s initial 2014 RVO rulemaking is whether the agency, as a matter of law, is allowed to consider the so-called E10 blend wall in determining RFS volumes.

“The oil industry says ‘yes,’” he said, adding that the petroleum industry indicated we’ve reached the maximum level of ethanol that can be blended into gasoline because there aren’t enough vehicles or infrastructure to accommodate higher blends. “We say that’s nonsense because the RFS legislation was designed to break the blend wall, to force the investment in infrastructure and technology that would drive increased consumer choice,” Dinneen said. “The fact the law ultimately requires 36 billion gallons of renewable fuel to be used, far more than can be used in a 10 percent blend, certainly suggests where a bipartisan Congress landed on this issue in 2007.”

Dinneen also argued that API is wrong about its belief about the blend wall for other reasons. “The law provides a waiver from the required volumes for two circumstances: severe harm to the economy, which can’t be demonstrated when ethanol is less expensive than gasoline, and inadequate domestic supply. But, congress specifically rejected versions of the bill that included infrastructure and demand as a factor in such a waiver,” he said.

“Second, as a practical matter, API is also wrong about the market’s ability to consume more than 10 percent ethanol,” Dinneen continued. “There are now 17.5 million FFVs on the road capable of using anything from E10 to E15 to E85, and while EPA has approved E15 for as much as 85 percent of the vehicles on the road, manufacturers themselves now provide warranty coverage for E15 for as many as 41 million vehicles, that’s more than three times as many cars warrantied for E15 than are currently required to use premium gasoline. We don’t have a problem locating premium fuel in this country and there is no reason, other than greed, that E15 is so scarce. This is not a market or consumer issue, this is a clear case of an incumbent industry unwilling to acknowledge a changing landscape and trying desperately to hang on to its monopoly, refusing to make investments in infrastructure or allow franchisees to offer consumers a lower-priced higher-octane renewable fuel.”

To help McCarthy, members of Congress and President Obama understand the choice they face in setting the RFS RVOs, Fuels America has launched a six-figure ad buy in Washington, D.C., that includes television and digital advertisements. Dinneen stressed the choice in how to implement the RFS is essentially a choice between American innovators or oil industry profits; low carbon fuels or fracking; value-added markets for farmers and jobs in rural America or imports; and a sustainable energy future or a return to the failed energy policies of the past. “It seems like a pretty clear choice,” he said. 

Brooke Coleman, executive director of the Advanced Ethanol Council, said the question is whether the EPA will, for the first time, waive the RFS if the oil industry refuses to distribute renewable fuels. “If oil companies know they can avoid the RFS by simply refusing to enter into contracts to buy and distribute our fuel, advanced biofuels will cease to have a U.S. market, and U.S. investment will dry up,” he said.

According to Coleman, the EPA’s initial proposal for 2014 RVOs has already impacted the willingness of some advanced biofuel companies to commit to additional U.S. investments. “Almost without exception, our companies are looking in China, in Brazil, in some cases in India and in some cases in Europe, to develop their second and third projects, while the first ones wait to see what the president is going to do,” he said.

Coleman also noted that the issue with the RFS rulemaking could have far-reaching impacts. If Big Oil’s refusal to comply with the RFS works, Coleman indicated that refusal could become the playbook for other industries on how to avoid compliance with Clean Air Act programs.

When asked about plans to meet with the White House to discuss the upcoming RVO proposals, Dinneen was unable to offer any specific details, but said those meetings are likely to occur. He also noted that the EPA has not held any stakeholder meetings during the initial rulemaking process.

Regarding the administration’s rulemaking decision, Dinneen added that while the RFS rule will be the EPA’s, the content of the rule will essentially be the White House’s call. He also noted that there have been so many personnel changes at the White House, it’s hard to determine what the decision will be.

Coleman added that he is fairly certain White House advisors are still considering the bad methodology, primarily because it alleviates political pressure from the oil industry. “We don’t know where they are going to go. We suspect there is more than one option on the table,” he said, adding that the Fuels America ad buy is only the first in a long series of strategies that will be deployed over the course of the month to help explain to those in Washington, D.C., and consumers as a whole, what the choice is all about.

Coleman also said that he expects the EPA to issue the RVO proposal within the June 1 timeline agreed to in court documents. While the White House Office of Management and Budget technically has up to 90 days to consider a proposed rule, Coleman said the OMB has acknowledged the EPA’s timeframe in announcing an expedited review of the rule. “I would be quite surprised if the administration was not able to get the proposal out in the timeframe that they’ve agreed to with the courts,” he said.

The EPA submitted the proposed rule for the 2014, 2015 and 2016 RVOs to the OMB on May 7. In April, the agency announced its intent to release proposed rulemaking for the 2014, 2015, and 2016 RFS renewable volume requirements (RVOs), along with 2017 RVOs for renewable diesel, by June 1. Final rulemaking is scheduled to be issued by Nov. 30.

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