Renewable fuels proposal met with resistance

by Eric Schroeder
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WASHINGTON — The May 29 proposal by the Environmental Protection Agency aiming for a lowering in the amount of ethanol that must be blended into the U.S. gasoline supply was met with disapproval from the renewable fuel industry, which argued that the announcement “represents a step backward for the R.F.S. (Renewable Fuel Standard).”

“E.P.A. successfully enforced a 13.8 billion gallon RVO (renewable volume obligation) in 2013,” said Bob Dinneen, president of the Renewable Fuels Association. “The industry produced 14.3 billion gallons of ethanol last year. There is no reason to promulgate an RVO rule that takes us backward. All it will do is result in an ever-increasing supply of renewable fuel credits (RINs) that will further discourage private sector investment in infrastructure and technology. This doesn’t make sense.”

The E.P.A. has proposed requiring refiners to blend 17.4 billion gallons of renewable fuels in 2016, below the 22.3 billion target set by Congress. In 2015, the proposal has been set at 16.3 billion gallons, below the 20.5 billion set by Congress.

In its regulatory announcement, the E.P.A. said its proposed standards were “ambitious but within reach of a responsive marketplace.”

“E.P.A. recognizes that the statutory volume targets were intended to be ambitious; Congress set targets that envisioned growth at a pace that far exceeded historical growth rates,” the E.P.A. said. “Congress clearly intended the R.F.S. program to incentivize changes that would be unlikely to occur absent the R.F.S. program. Thus while E.P.A. is proposing to use the tools provided by Congress to waive the annual volumes below the statutory levels, we are proposing standards that are directionally consistent with Congress’ clear goal of increasing renewable fuel production and use over time.

“The proposed volumes would require significant growth in renewable fuel production and use over historical levels.”

The E.P.A. said it had the legal authority to reduce volumes of advanced biofuel and total renewable fuel in two different cases. First, when the E.P.A. lowers the applicable volume of cellulosic biofuel below the volume specified in the Clean Air Act, the E.P.A. also has the authority to reduce the applicable volumes of advanced biofuel and total renewable fuel by the same or a less amount. Second, the E.P.A. may reduce the applicable volumes of any renewable fuel under the C.A.A. general waiver authority under certain conditions, including where there is “inadequate domestic supply.”

Jack Gerard, president and chief executive officer of the American Petroleum Institute, a trade group representing more than 550 oil and natural gas companies, said the announcement “makes abundantly clear that the only solution is for Congress to repeal or significantly reform the R.F.S.”

“Members on both sides of the aisle agree this program is a failure, and we are stepping up our call for Congress to act,” Mr. Gerard said.
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