Inhofe, Senators Urge RFS Policy to Reflect Market Realities

(Office of Senator James N. Inhofe (R-OK)) In advance of the upcoming proposed rulemaking for the 2020 Renewable Volume Obligations (RVO) of the Renewable Fuel Standard (RFS), U.S. Sen. Jim Inhofe (R-Okla.) led a letter urging Administrator Wheeler to reset conventional biofuel to reflect market realities. The letter was signed by Sens. John Barrasso (R-Wyo.), John Boozman (R-Ark.), Bill Cassidy, M.D. (R-La.), Shelley Moore Capito (R-W. Va.), Susan Collins (R-Maine), John Cornyn (R-Texas), Tom Cotton (R-Ark.), Steve Daines (R-Mont.), Mike Enzi (R-Wyo.), Cindy Hyde-Smith (R-Miss.), James Lankford (R-Okla.), John Kennedy (R-La.), Pat Toomey (R-Pa.) and Roger Wicker (R-Miss.).

The letter asks that the EPA use their reset authority under the RFS to set conventional biofuel below 10 percent of the projected U.S. Energy Information Administration (EIA) gasoline demand in 2020. At the time that the RFS was enacted, the EIA expected demand to be much higher than it is today and as such, set statutory targets below 10 percent of the expected demand.

“We strongly urge you to protect U.S. consumers and account for the ethanol blend wall when setting annual target volumes under the Renewable Fuel Standard's (RFS) reset requirements. Over a decade ago, the U.S. Energy Information Administration (EIA) projected 2020 gasoline demand would exceed more than 170 billion gallons, thus the 15 billion gallon conventional fuel mandate represented less than 10 percent of the expected gasoline demand. More than a decade since the RFS was passed into law, changes in consumer behavior and use of transportation fuels result in EIA now projecting gasoline demand for 2020 to be closer to 142 billion gallons, decreasing further to 137 billion gallons in 2022,” the senators write.

The letter continues: “We urge you to use the reset authority under the RFS for program for the purpose for which it was intended and reset the statutory targets such that the implied contribution of conventional biofuel is below 14.2 billion gallons for the 2020 compliance year.”

Excerpt from Ethanol Producer Magazine: In response to the letter, Jessica Bennett, vice president of government and external affairs at the RFA, issued a statement stressing the intention of the RFS—which passed with overwhelming bipartisan support—was to expand the production and use of biofuels and “not to accommodate the oil industry’s monopoly over the gasoline market.”

Bennett pointed out that “oil companies have long sought a reduction in the RFS to levels that would leave the ethanol market stagnate.” She said the RFS was successful in dismantling the blend wall when the program was being implemented as intended by congress.

“Prior to the explosion of small refinery waivers, the national ethanol blend rate topped 10.7 percent, with several states where E85 is widely used experiencing blend rates considerably higher,” she said. “However, for the first time ever, last year, following more than 2.7 billion gallons of waived RFS requirements, both the ethanol blend rate and the total volume blended fell. Still, when EPA finalizes the E15 RVP rule later this month, it will stimulate significant new investment by gasoline marketers desiring to offer a higher quality, lower priced fuel for their consumers, and will rightly end any argument about a blend wall.”

“Rather than use the reset authority to lower conventional biofuel volumes, EPA should utilize its reset authority to reallocate lost volumes from its excessive use of small refinery waivers and increase conventional biofuel volumes beyond 15 billion gallons annually,” Bennett continued. “Again, the whole point of the RFS was to drive investments in the expanded use of domestically produced renewable fuels. Even former EPA Administrator Scott Pruitt recognized the success of conventional biofuels like ethanol and acknowledged that EPA could expand beyond 15 billion gallons. Unless we want to take our nation’s energy policy backwards, that’s exactly what EPA should do.” READ MORE