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RIN Price Cap a Demand Cap: Oil Industry Study Makes Ethanol Industry’s Case on Motive, Impact

Submitted by on March 12, 2018 – 2:27 pmNo Comment

by Chris Clayton (DTN The Progressive Farmer)   A study commissioned by the country’s largest oil refiner explains how a waiver credit would freeze ethanol demand.

Ethanol industry groups are pointing to several statements in the oil industry’s own report to make the case that arguments over regulatory waivers or caps are built on false premises and would only harm corn or soybean demand.

Statements layered throughout the oil-industry study validate fears raised by ethanol industry groups over a waiver cap on renewable identification numbers, or RINs, the certificates attached to every gallon of ethanol.

A RIN cap would effectively freeze biofuel use at below 10% of total fuel volume, according to a study conducted by Charles River Associates. The conclusions of the study also run counter to the claims made by Sen. Ted Cruz, R-Texas, the chief advocate for the petroleum industry, in trying to get President Donald Trump to sign off on the waiver plan.

The Charles Rivers study was commissioned by Valero and published this week. Yet Reuters reported on Aug. 21, 2017, about a “behind-the-scenes lobbying campaign,” headed by Valero around policy proposals “that could save the refiner hundreds of millions of dollars each year in regulatory costs.” At the time, Reuters reported Valero was pushing a change in the point of obligation requirements under the RFS, which EPA declined to change. The campaign strategy then shifted as Valero and other refiners looked for other ways to reduce their compliance obligations. (…)

The lobbying push by Valero, the nation’s largest refiner, runs counter to the argument that relief on RINs is largely to help smaller mom-and-pop refiners. Carl Icahn, a billionaire investor, last year also advocated changes in biofuels policies to the Trump administration.

The Charles River Associates study cites at least four times that waiver credits would ensure ethanol blends remain below the 10% blend volume. Another passage cites that certain biodiesel RIN credits would lower biodiesel demand by about 330 million gallons.

“This was an internal study done not to analyze the proposal, it was done to create the proposal,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association. “They set out to say, ‘What can we do to get down to below the blend wall.’ So this document is all about how to craft the proposal.”

 “They were just trying to hide their true motive. Their whole focus here is demand destruction. They want to freeze us in an E10 world with a 90% petroleum mandate. And this report makes it as clear as a bell.”

If EPA were to support a RIN waiver or cap, the agency would be forced to begin a formal rulemaking process. The RFS has several other waiver rules and authorities. Congress did not specifically grant EPA authority to issue waiver credits for conventional biofuels, so a RIN rule itself could be ruled illegal and the process could be tied up in federal courts.

The Charles River Associates study can be viewed at…  READ MORE

RIN Volatility Due to Regulatory Uncertainty (ACT News)

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