News & Ideas

ACE comment on apparent RFS-RVP deal

Sioux Falls, SD (February 28, 2017) Brian Jennings, Executive Vice President of the American Coalition for Ethanol (ACE), released the following statement in response to unconfirmed reports that a White House Executive Order is imminent which will shift the Renewable Fuel Standard (RFS) point of obligation away from refiners in exchange for providing Reid vapor pressure (RVP) relief for E15.

“Despite rumors, this is not a done deal and not a take-it-or-leave-it scenario.  Changing the RFS point of obligation and providing RVP relief will both require EPA rulemaking and public comments.  ACE has long pursued a fix to the burdensome RVP regulation which currently prohibits the year-round sale of E15, but doing so in a tradeoff which would reward Carl Icahn and help refiners like Valero avoid their legal responsibilities under the Clean Air Act would backfire on our industry because some of the marketers and retailers we rely on to sell E15 and higher blends today would be saddled as obligated parties under the RFS tomorrow.  Even EPA has said shifting the RFS point of obligation away from refiners to downstream parties “would more likely result in a decrease in the production, distribution, and use of these fuels (E15, E30, E85), particularly in the near term.”

The point of obligation is one of the most important remaining tools to help drive higher blends remaining in the RFS. It creates economic incentives for gasoline retailers to offer higher blends such as E15 through the trading of Renewable Identification Numbers (RINs) needed to show compliance with the RFS.  RVP and the RFS are a critical tandem. This is especially true because of the Obama administration’s legally-dubious interpretation of the RFS waiver authority that has hindered the biofuel industry’s growth. If the President really wants to make an impact he could direct Attorney General Sessions and EPA Administrator Pruitt to stop defending this Obama interpretation in the lawsuit that the biofuel industry was forced to bring along with providing RVP relief.

The only clear winners in a deal to move the RFS point of obligation would be Carl Icahn and oil refiners like Valero.  Farmers, community-owned ethanol plants like those ACE represents, and the small businesses that we rely on to market and retail E15 and higher blends would all be hurt.

A unified group of biofuel interests, led by ACE, wrote Administrator Pruitt in opposition to the Icahn bailout last week.  A copy of the letter can be found here.  

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