More than two dozen advanced biofuel producers have submitted a letter to President Obama today calling on him to reconsider the proposed Renewable Fuel Standard (RFS) rule for 2014. Led by the Advanced Ethanol Council and the Biotechnology Industry Organization (BIO), the groups write: “The RFS is necessary because the highly consolidated, vertically integrated oil industry is not otherwise going to allow market access for renewable fuels”.
The letter continues, “To reduce the 2014 blending requirements and volumes in future years, EPA is proposing to use its general waiver authority based on ‘inadequate domestic supply.’ But EPA is putting forward a novel interpretation of the word ‘supply’ to mean the ability of current infrastructure to deliver renewable fuel blends to consumers, instead of the available supply of renewable fuel to obligated parties. We believe that this new interpretation is inconsistent with the plain meaning of the statute and its legislative history. But the bigger issue is that this interpretation has the practical effect of handing the future trajectory of the RFS to the oil industry by virtue of the fact that the oil industry itself controls the distribution of fuel to consumers.
The threat that oil companies could simply lie down on the RFS to avoid obligations vastly increases supply-chain risk for new projects, as opposed to those already in the ground. Given that more than 90 percent of future blending obligations under the RFS are for advanced biofuels, the Administration’s new methodology would actually scuttle U.S. investment in advanced, low-carbon biofuels in direct conflict with the Climate Action Plan and your Administration’s goals with regard to reducing oil dependence and promoting advanced biorefineries via USDA and DOE programs.
“We are most concerned about the current proposal’s impact on climate change. Our industry has invested billions of dollars in the development and commercial deployment of ultra-low carbon biofuels during your Administration alone. These investments were made based on the expectation that when we succeed, the RFS will be maintained as a mechanism to create a market for our fuels. The current proposal would break that promise by handing the RFS to incumbent industries that want to see it fail. And by any account, the real world alternative to renewable fuels is marginal, high carbon intensity oil,” the letter concludes.