Rumors swirled today that the US EPA would finally announce the 2014 renewable volume obligations – quantity of ethanol and biofuels to be blended into the fuel supply – until the agency surprised many by postponing the announcement until next year. The renewable fuel standard, as the law is known, has been controversial for years. The oil industry claims the law is broken and needs to be repealed, while the biofuels industry is very much in favor of the RFS and lobbies hard to keep it.
Read further Breaking Energy RFS coverage here.
The RFS enforced by the EPA was originally envisioned as a way to get more biofuel into the US transportation fuel market, but changing technology and consumption patterns have required continual adjustments to the law.
Needless to say the refining industry was furious and immediately moved to sue the EPA as a result of the delay. “For three years in a row, the Administration has thumbed its nose at Congress and ignored a crystal clear statutory deadline to issue RVOs by November 30 of the preceding year. For this reason, AFPM [American Fuel & Petrochemical Manufacturers] today filed a notice of intent to sue EPA over its failure to issue the 2014 RFS regulations, which has languished at the White House Office of Management and Budget since August 22, 2014,” the group said in a statement.
Major refining company Valero used softer language, but was no less perturbed by the EPA’s decision:
“EPA’s announcement underscores the need for comprehensive legislative reform of the RFS. The bottom line is that EPA has not closed the books on 2013, has no final 2014 RFS, and has no date for a final 2015 RFS.” – Valero
Here is the official statement from the EPA:
“Today EPA is announcing that it will not be finalizing 2014 applicable percentage standards under the Renewable Fuel Standard (RFS) program before the end of 2014. In light of this delay in issuing the 2014 RFS standards, the compliance demonstration deadline for the 2013 RFS standards will take place in 2015. EPA will be making modifications to the EPA-Moderated Transaction System (EMTS) to ensure that Renewable Identification Numbers (RINs) generated in 2012 are valid for demonstrating compliance with the 2013 applicable standards.” –EPA (read the remainder of their announcement here)
What a mess, even the country’s chicken farmers are upset:
“This seesaw process by which the EPA proposes an up-and-down, now-and-later moving target as the compliance year unfolds leaves poultry and livestock producers unable to plan and budget effectively,” National Chicken Council President Mike Brown said. “While corn prices have moderated, volatility and uncertainty are the true business-killers.”
Brown continued, “On top of all of this, we believed at one time that the original RFS included a workable provision that provided for an ‘off ramp’ in times of economic crisis. On at least two major occasions – in 2008 and 2012 during catastrophic weather events – that belief has proven false.
“What more evidence does the administration and Congress need to prove the RFS — and the administration of it — is broken beyond repair? The reality of this unworkable, unsustainable and imbalanced policy must be addressed in any energy or economic package that Congress considers in the near future.”
And the Renewable Fuels Association – a major ethanol and biofuels producer trade group – was also unhappy with the EPA, but kind of happy with the decision:
“Deciding not to decide is not a decision. Unfortunately, the announcement today perpetuates the uncertainty that has plagued the continued evolution of biofuels production and marketing for a year. Nevertheless, the Administration has taken a major step by walking away from a proposed rule that was wrong on the law, wrong on the market impacts, wrong for innovation, and wrong for consumers.
“Moreover, it is clear that one of the reasons we find ourselves in this position is that the oil industry has steadfastly refused to make the investments in infrastructure or allow their marketers to offer higher ethanol blends like E85 or E15. In the absence of their dogged efforts to undermine the RFS, this would be far simpler for EPA.
“The monopoly-protecting talking points of the oil industry notwithstanding, the RFS has been enormously successful. It has compelled competition in motor fuel markets, lowered consumer gasoline costs, and reduced the carbon footprint of transportation fuels. We look forward to working with the Administration to assure this critically important program is implemented consistent with congressional intent, to the benefit of consumers and with the goal of advancing the evolution of biofuels production and marketing.
“Refiners will continue to resist the competition from biofuels. The RFS must be allowed to be the market forcing mechanism it was designed to be. In the end, the verdict on today’s announcement can only be made after a decision on a path forward for biofuels is identified.” – Bob Dinneen, president and CEO of the Renewable Fuels Association
Given the difficulty EPA has had adjusting the rule and the confusion this has wrought for multiple industries, it would not be surprising to see the RFS reworked or repealed in 2015.
