Big Oil already pushing for partial waiver of 2014 RFS volumes

By Erin Voegele | August 13, 2013

One week after the U.S. EPA finalized the 2013 volume requirements for the renewable fuels standard (RFS), the American Fuel & Petrochemical Manufacturers and American Petroleum Institute are already gearing up to fight the 2014 RFS standards. The EPA has not yet proposed volume requirements for 2014.

On Aug. 13, the AFPM and API announced the filing of a joint petition with the EPA, asking the agency to waive 3.35 billion gallons from the 18.15 billion gallon statutory requirement for 2014. According to the petroleum groups, the reduction is “necessary to avoid the severe economic harm that will result from exceeding the 10 percent ethanol blendwall.”

Under the reduction proposed by the AFPM and API, the 2014 RFS standard would be set at 14.8 billion gallons, which is significantly lower than the 16.55 billion gallon volume standard set by the EPA for 2013 last week.

In a statement, AFPM and API claim that using ethanol blends greater than E10 is corrosive and incompatible with today’s engines, vehicles and infrastructure. “Waiving the 2014 volumes is the only available solution to avert the potentially disastrous implications of the blendwall,” said the groups in a statement. The two petroleum trade organizations also claim that the requirements of the RFS will result in increased costs for transportation fuel and cause economic harm throughout the economy.

“EPA missed a golden opportunity to address the ethanol blendwall in 2013; however, we’re encouraged the agency recognized there is a problem in its rule setting this year’s biofuel requirement,” said Charles Drevna, president of AFPM. “This petition will provide a roadmap for the agency to follow as it promulgates its 2014 waiver.”

In the release issued by the EPA finalizing 2103 RFS requirements, the EPA specified that it will propose to use flexibilities in the RFS statute to reduce both the advanced biofuel and total renewable volumes in the forthcoming 2014 RFS volume requirement proposal. On page 67 of the final rule for the 2013 standard the EPA expands on that statement, noting that the statutory 2014 RFS volume requirement of 18.15 billion gallons includes a 14.4 billion non-advanced biofuel pool, comprised mainly of corn ethanol, along with 3.75 billion gallons of advanced biofuel. “A significant portion of the fuel available to meet the advanced biofuel requirement would also likely be ethanol, including domestically produced cellulosic and advanced ethanol, along with advanced ethanol imported from Brazil,” said the EPA in the rule. “However, the maximum volume of ethanol that could be consumed as E10 in 2014 is projected to be just 13.2 billion [gallons].”  

According to the EPA, in proposing the 2014 RFS requirements, it will estimate the available supply of cellulosic and advanced biofuel, assess the E10 blendwall, along with current infrastructure and market-based limitations and propose to establish volume requirements that are reasonably attainable. “We are currently evaluating a variety of options and approaches consistent with our statutory authorities for use in establishing RFS requirements for 2014. We will discuss these options in detail in the forthcoming [notice of proposed rulemaking] for the 2014 standards and expect to utilize the notice and comment process to fully engage the public in consideration of a reasonable path forward that appropriately addresses the blendwall and other constraints,” said the agency in the final 2013 rule.

While the petition filed by the AFPM and API asks the EPA to waiv  part of the 2014 standard, the filing shouldn’t prompt any official action from the agency. Language included in Section 211 of the Clean Air Act, which established the the RFS program, clearly states that waiver must be filed by a state government or an obligated party to prompt EPA action. As trade organizations, neither the AFPM nor API fits that definition.

Growth Energy has spoken out to criticize the waiver filing. “The actions by API and AFPM are designed with one goal in mind –to eliminate any competition from clean, green biofuels in the liquid transportation fuels marketplace,” said Growth Energy CEO Tom Buis. “It is time that oil companies and special interests stop worrying about maintaining their monopolistic practices and allow competition and choice in the marketplace. Not only should we provide consumers a choice and savings at the pump, we must stop putting our eggs in one basket when it comes to a national energy policy. Biofuels are a clean burning, reliable and sustainable alternative and it is time we start recognizing their cost savings and numerous benefits and end our addiction to a fossil fuels and Big Oil’s price gouging.”