Biofuel industry defends RFS during House committee hearing

By Erin Voegele | December 11, 2018

On Dec. 11, the House Committee on Energy and Commerce’s Subcommittee on Environment held a hearing on the recently released discussion draft of the 21st Century Transportation Fuels Act, which aims to sunset the Renewable Fuel Standard and enact a national octane specification. During the hearing, those in the biofuels industry stressed the need to maintain a strong RFS.  

Reps. John Shimkus, R-Ill., and Bill Flores, R-Texas, released a 34-page discussion draft of the bill on Nov. 21. As currently written, the draft legislation aims to sunset the conventional biofuel requirements of the RFS as of 2023. That provision would primarily impact corn ethanol, which is used to meet the majority of the conventional biofuel requirement. For 2023 through 2032, the U.S. EPA would set RFS renewable volume requirements (RVOs) for advanced biofuel, cellulosic biofuels and biomass-based diesel at levels equal to the volume of those fuels produced during the previous calendar year. The RFS would be repealed in its entirety in 2033.

The bill also includes a variety of other provisions, including those that would require automobile manufacturers, starting in 2023, to design vehicles to operate using gasoline that has a research octane number (RON) of 95 and warrantee vehicles to operate with gasoline blends of up to E20. It would also extend the current Reid vapor pressure (RVP) waiver to fuel blends containing more than 10 percent ethanol.

The Dec. 11 hearing featured testimony from a wide variety of stakeholders, including those representing the National Association of Convenience Stores and Society of Gasoline Manufactures, the Renewable Fuels Association, Growth Energy, the National Corn Growers Association, American Fuel and Petrochemical Manufacturers, United States Council for Automotive Research, Advanced Biofuels Council, the Coalition for Renewable Natural Gas, National Association of Truck Stop Owners, the National Biodiesel Board, and Advanced Biofuels Association.

In his testimony, Geoff Cooper, president and CEO of the RFA, said the draft bill represents an important first step in the debate about future fuel policy—specifically the role of high octane low carbon (HOLC) fuels. However, Cooper stressed the RFA cannot support the proposal as currently drafted “because it falls short of providing the future market certainty and clear growth trajectory” the ethanol industry needs. By eliminating the RFS requirements for conventional biofuels and adopting a no-growth methodology for advanced and cellulosic biofuels, Cooper said the draft bill would undermine the considerable process the U.S. has made toward greater energy security, economic vitality and environmental health.

Cooper testified on the success of the RFS, noting it has lowered consumer fuel prices, decreased reliance on imported petroleum, reduced tailpipe emissions, supported thousands of rural jobs and added value to crops produced by U.S. farmers. He stressed that current regulations do not end the RFS in 2022. With proper oversight and implementation, he said the program will continue to drive innovation, support rural economies and provide cleaner, more affordable fuel choices at the pump. “We simply cannot support eliminating the RFS program, as the draft envisions, without a much stronger signal to the market that ethanol’s role in our fuel supply will continue to grow,” he said in his testimony. “A 95 RON standard does not provide that signal and is not a suitable replacement for the RFS beyond 2022.” Cooper noted that a recent study commissioned by the U.S. Energy Information Administration clearly shows oil companies could meet a 95 RON standard without using any more ethanol beyond current levels.

Emily Skor, CEO of Growth Energy, noted her organization supports certain aspects of the draft bill—specifically the recognition that octane plays a critical role in helping automakers meet current and future fuel economy and greenhouse gas (GHG) standards, the provision to lift the RVP barrier for ethanol blends above E10, and federal approval for fuels beyond E15.

However, Skor also stressed the need to maintain the RFS. She said she hopes the committee will look to the RFS for inspiration rather than work under the false assumption that the program needs to be fixed. Despite years of mismanagement, Skor said the RFS has still been able to fulfill its original intent—to increase domestic energy supplies, improve farm economies and reduce carbon emissions. “By any objective measure, the RFS has been an overwhelming success and serves as the bedrock policy that has allowed our nation’s ethanol industry to flourish since 2005,” she said in her testimony. “The absolute repeal of the RFS is unnecessary and will further destabilize the farm economy and the ethanol sector, both of which are already suffering from EPA’s excessive use of small refinery exemptions, roadblocks erected by the oil industry to ethanol-blended fuel, and export barriers.”

Skor also said the draft it not bold enough when it comes to pursuing a plan to provide consumers with cleaner, more affordable fuels. She said the move to a 95 RON baseline fuel would require almost no changes from refiners across the country. In addition, Skor said the draft bill fails to recognize the “sweet spot” where ethanol can help achieve the dual gains for increased fuel efficiency and reduced emissions—an E30 blend. She also criticized the bill for including no safeguards to protect against reduced ethanol blending by those would seek to substitute oil-refined products for renewable biofuels.

Brooke Coleman, executive director of the ABBC, said that while his organization supports several provisions in the discussion draft, other parts of the proposal undercut any potential for those provisions to promote innovation and growth in the American renewable fuels industry. He said replacing the RFS with an octane standard removes the legal requirement to use renewable octane while overlaying a massive new incentive for the oil industry to figure out how to add octane to gasoline without relying on renewable fuels. He also said the ABBC believes the bill, as written, would increase gas prices as the oil industry is unlikely to act against its economic self-interest by blending less expensive ethanol, and would likely replace ethanol with more expensive oil-based octane sources.

Coleman also noted that the bill’s treatment of advanced biofuels would undercut investment and market growth by setting annual volume standards based on prior year actual production. “The problem with setting the cellulosic biofuel standard based on prior year production is it puts the growth trajectory of cellulosic biofuels largely in the hands of the oil industry,” he said in his testimony.

While Coleman called the bill’s market readiness provisions—such as vehicle warranties for ethanol, pump infrastructure, and RVP—good policy, he said biofuel market readiness is of diminished value to the biofuels industry if the driver to deliver renewable fuel to market is removed.

Manning Feraci, director of federal affairs at the RNG Coalition, said his group supports the RFS program, and noted the current RFS program provides more policy stability for RNG stakeholders than a program that sunsets in 2032. He also stressed that the bill’s approach to setting yearly volume requirements for cellulosic fuels could have the unintended consequence of causing advanced biofuel production to stagnate or potentially contract.

Kurt Kovarik, vice president of federal affairs at the NBB said improvements are needed to the draft bill in order to incentivize further investments and support predictable growth for the biodiesel industry. He also stressed that a national octane standard would not benefit biodiesel.

Michael McAdams, president of the ABFA, called for comprehensive reform to the RFS, including a rules-based process for setting annual blending targets, expanding the definition of renewable biomass, and encouraging the U.S. EPA to address the bio-intermediate issue.

Additional information, including full copies of each witness’s written testimony and a video recording of the hearing, is available on the committee website