API reiterates need to reform RFS as EPA readies proposed 2019 quotas

Corrections were made to this story Aug. 17.

Small refiner exemptions that the US Environmental Protection Agency issued to help the refiners meet renewable fuel quotas are only the latest sign that the federal Renewable Fuels Standard program is badly broken and needs to be repealed or dramatically reformed, an American Petroleum Institute official said as the agency sought comments while it prepares to propose 2019 renewable fuel quotas.

“The fact that so many of these exemptions were granted shows the program is broken,” API Downstream and Industry Operations Group Director Frank J. Macchiarola said during an Aug. 16 teleconference. “But some want these obligations reallocated to other parties, which we oppose as an even greater inequity,” he said.

The Renewable Fuels Association has charged that the small refiner waivers resulted in a decline in biofuel demand and cost US corn growers, ethanol producers, and ethanol blenders more than $5 billion. It plans to ask EPA to reallocate the volumes involved in the proposed 2019 quotas when it files comments before the Aug. 17 deadline.

Assumptions when the RFS was expanded in 2007 legislation are no longer valid since US oil production jumped as unconventional exploration and development technologies let producers tap previously inaccessible resources in tight shales, Macchiarola noted.

“There also was an assumption that we would continue to increase our reliance on imported oil, which has not come true because of the domestic production revolution from unconventional sources,” he said. “Finally, there was an effort by Congress to promote use of cellulosic and next-generation ethanol into the marketplace to reduce greenhouse gas emissions. That production has not materialized.”

Bipartisan support continues to grow in Congress to change the RFS program, Macchiarola said. “We’re optimistic that there are bipartisan groups in both the House and Senate who recognize that this program is deeply flawed. Nevertheless, the legislative process is slow, and it will take time,” he said.

“We believe this program is deeply flawed, and a good number of legislators agree with this statement,” Macchiarola said. “Our goal is to get more stakeholders on board with this. That includes the ethanol industry, which we hope will begin to offer some constructive ideas to help us form a consensus.”

Contact Nick Snow at [email protected].