The US Renewable Fuel Standard and repeal, reform: The Digest’s 5 Minute-Guide

July 24, 2013 |

Capitol“You don’t have enough for repeal. You do have enough for some reforms. ” says key GOP lawmaker.

20-billion-plus requirement, with built-in flexibility proposed, as RFS opponents, supporters tangle on the Hill. Can the RFS survive?

The Digest’s condensed guide helps you wade through the voices, the issues, and the outcomes.

Background:

Yesterday in DC, the House Energy & Commerce committee convened a major hearing on the US Renewable Fuel Standard — primarily on the short-term impacts of the ethanol blend wall and the impact on RIN prices.

The testimony included a number of far-ranging which included appearances by  the American Petroleum Institute, American Fuel & Petrochemical Manufacturers, Renewable Fuels Association, Advanced Biofuels Association, Union of Concerned Scientists Clean Vehicles Program, Growth Energy, The Alliance of Automobile Manufacturers, Briggs & Stratton Corporation, AAA, Society of Independent Gasoline Marketers of America and National Association of Convenience Stores, National Biodiesel Board, National Corn Growers Association, National Chicken Council, National Council of Chain Restaurants, Environmental Working Group, and Professor Chris Hurt from Purdue’s Department of Agricultural Economics.

Our summary is published below — plus, condensed remarks from the key players and charts to illustrate the issues.

Printing all at once? A print-friendly version of this article is here.

Links to full testimony here.

The Face-Off on the Hill

By Isabel Lane
Digest assistant editor

In Washington, five veteran Renewable Fuels Standard warriors faced off yesterday in front of the House Committee on Energy & Commerce in a hearing on stakeholder opinions of the RFS. The hot-button issue was the “blend wall”: the gap between the number of RFS-mandated ethanol gallons and the number of gallons demanded for E10 blends in the United States.

RFS-hearing-4shot

Testifying yesterday in Washington, DC on the US Renewable Fuel Standard (clockwise from top left: Charles Drevna, AFPM; Bon Dinneen, Renewable Fuels Association; Mike McAdams, Advanced Biofuels Association; Jeremy Martin, Union of Concerned Scientists

Speakers on the first panel included:

Jack Gerard, President & CEO of the American Petroleum Institute (API)
Charles Drevna, President of American Fuel and Petrochemical Manufacturers (AFPM)
Bob Dinneen, President & CEO of the Renewable Fuels Association (RFA)
Michael McAdams, President of the Advanced Biofuels Association (ABFA)
Dr. Jeremy Martin, Senior Scientist in the Clean Vehicles program at the Union of Concerned Scientists (UCS)

Because demand for gasoline has declined since the RFS was expanded in 2007, Jack Gerard opened the hearing by warning that exceeding the blend wall stands to slash U.S. GDP by $770 billion. Bob Dinneen and Michael McAdams both fired back that the mismatch equates to only 500 million gallons in 2013: 3.3% of the entire US renewable fuels industry, and less than 0.2% of the U.S. fuel market.

“Calling for the full repeal of the RFS over a short-term issue impacting less than 1% of all the fuels we use doesn’t make a lot of sense as a public policy issue,” explained McAdams. Indeed, Dinneen argued, in 2013, the blend wall is so small that the gap can be closed with existing E15 and E85 stations.

Unfortunately, Charles Drevna contended, consumers do not accept E15 and E85 blends.

Additionally, argued the petroleum interests, the blend wall has driven up the price of RINs, as oil companies are anticipating scarcity of the credits as we approach the blend wall. Drevna noted that RIN market prices have skyrocketed to $1.48 from $0.06.

“RINs are free,” hammered home Bob Dinneen. He went on to say that producers have chosen not to make ethanol, and have entered this market voluntarily. “The bottom line is that you produce a gallon of ethanol, and you get a RIN. It doesn’t cost anything.”

In today’s Digest — So, if the blend wall exists, does the RFS face repeal?; a Great Compromise?;  The Blend Wall Issue; the RINs situation; is the Blend Wall and RFS-buster?; concerns about E15 ethanol; RFS impact on the food sector; diversifying the fuel supply; the real problems and immediate relief; and “a way forward?” – all by following the page links below.

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