NATSO Testifies on Draft Legislation to Reform the Renewable Fuel Standard

NATSO was invited to testify before Congress Dec. 11 to discuss new legislation that would reform the Renewable Fuel Standard (RFS) and transition the gasoline market to a high octane fuel performance standard.

Titled the 21st Century Transportation Fuels Act, the legislation would, among other things, end the Renewable Fuel Standard's ethanol blending mandate beginning in 2023, and eliminate the advanced biofuel (e.g., biodiesel) blending mandate 10 years later. It would also begin a transition to higher octane gasoline.

Testifying before the U.S. House Committee on Energy and Commerce Subcommittee on Environment, NATSO Vice President of Government Affairs David Fialkov focused primarily on the diesel market and the opportunities for policymakers to incentivize diesel retailers to incorporate increasing amounts of advanced biofuels such as biodiesel into the nation’s diesel fuel supply.

NATSO supports the provisions of the 21st Century Transportation Fuels Act that would facilitate market conditions and opportunities for its members to lower prices for consumers for advanced biofuels. However, Fialkov also recommended revisions to the draft legislation that would eliminate unnecessary obstacles to market investment in renewable fuels infrastructure and that undermine the returns on those investments that industry has already made.

Specifically, Fialkov testified in favor of the provisions that would extend the advanced biofuels mandate for another decade. But Fialkov strongly urged lawmakers to revise the draft legislation to address NATSO’s concerns about the Environmental Protection Agency’s practice of issuing small refinery waivers that exempt small refineries from their obligations under the RFS, including small refineries that are owned by profitable refining entities.

Responding to a question from Congressman Pete Olson (R-Texas) about whether the legislation "moves in the right direction" for market certainty, Fialkov said, "The bill moves in the right direction with respect to the rules-based RVOs. This notion that there is a homogenous oil industry that will not buy biofuels to artificially lower the RVO in a given year is simply not true.  

"All of the progress in terms of establishing certainty doesn’t mean a lot if you don’t address the small refinery exemption issue," Fialkov continued. "That is the kind of thing that will inject uncertainty and the mere fact that it is looming out there means that there is a level of uncertainty no matter how you adjust the RVO process."

NATSO said in a statement to media that the fact that the legislation is silent on the topic of the small refinery exemptions is "a real flaw" and that any legislation to reform the RFS must remedy this situation.

To read a full copy of NATSO's written testimony, click here.

Michael McAdams, President of the Advanced Biofuels Association, testified that any bill starting a discussion about reforming the RFS was a good bill, but also urged Congress to address concerns about small refinery exemptions. 

Citing EPA data, McAdams testified that EPA's unilateral decision to lower the threshold that the agency utilizes to grant RFS compliance exemptions to small refineries will create more than 1.2 billion additional carry-over Renewable Identification Numbers (RINs) for use in the 2018 compliance year. 

The significantly higher number of these small refinery exemptions stand to reduce the demand
for renewable fuel by flooding the market with RINs that do not reflect current production and
available physical supply of product, despite a growing annual RVO.

"This process must be halted, as it is undermining the very RVO process in and of itself. EPA is misusing this provision, stretching the definition of 'disproportionate economic hardship,'" McAdams testified.

McAdams wrote in his testimony that EPA documentation predicted carry-over RINs for 2019, implying that the agency may intend to follow a similar approach next year for granting exemptions.

"Congress must make explicit its intent to protect only those small, independent refineries
experiencing verifiable, disproportionate, and significant economic hardship, and not to further
augment the results of highly profitable refiners," McAdams said in his testimony. 




via Business Feeds

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