RFS2 – The battle continues

September 16, 2013 |

nyt-091613Yesterday, the New York Times ran a major piece looking at the role of financial institutions in driving RINsanity — the rapid rollercoaster in biofuels credits known as Renewable Information Numbers (RINs), the accounting mechanism for the Renewable Fuel Standard.

The Times reports that “Traders for big banks and other financial institutions, these people say, amassed millions of the credits just as refiners were looking to buy more of them to meet an expanding federal requirement.

The Times adds: “Industry executives familiar with JPMorgan Chase’s activities, for example, told The Times that the bank offered to sell them hundreds of millions of the credits earlier this summer. When asked how the bank had amassed such a stake, the executives said they were told by the bank that it had stockpiled the credits…market participants, including Thomas D. O’Malley, chairman of PBF Energy in Parsippany, N.J., identified JPMorgan Chase and other financial institutions as being active sellers of the credits this year. He said the institutions had helped transform an environmental program into a profit machine, contributing to the market frenzy this year.”

Here’s the article.

What will Congress do?

Elsewhere, we see Congress looking to address RINsanity and what is known as the 10 percent ethanol “blend wall”.

The Digesterati tell us that the Republican “Gang of 4” (Reps Shimkus (R-IL), Gardner (R-CO), Terry (R-NE) and Scalise (R-LA) met together last week and discussed options. RFS2 repeal appears to be off the table, now.

One option under consideration is the release of a major study on the issues surrounding the RFS — another option is legislation or rule-making that will make it easier to get waivers.

There remains a possibility that the House Energy & Commerce Committee will attach an anti-RFS amendment to a continuing resolution on stop-gap funding while the budget bills are finalized. The E&C Committee is now expecting hold hearings on the RFS the week of October 7.

Through their forces on the Hill, refiners are pushing hard for the RFS Reform bill, which originates with House Judiciary Committee chairman Bob Goodlatte and is also sponsored by Jim Costa (D-CA)., Steve Womack, (R-AR), and Peter Welch (D-VT) — this one strikes all corn ethanol requirements and caps ethanol blending at 10 percent, while requiring the EPA to set cellulosic biofuels to actual production levels. The bill is also hugely popular amongst the milk, turnkey and pork producers — who see low corn prices and fattened profits in the bill.

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