Letter asks EPA to use RFS reset rule to lower ethanol RVOs

By Erin Voegele | May 02, 2019

A group of 15 senators, led by Sen. Jim Inhofe, R-Okla., sent a letter to U.S. EPA Administrator Andrew Wheeler April 30 asking him to use the agency’s upcoming Renewable Fuel Standard reset rule to limit future renewable volume obligations (RVOs) for conventional biofuel to less than 10 percent of projected gasoline demand. In response to Inhofe’s letter, the Renewable Fuels Association is calling on the EPA to use the RFS reset rule to reallocate lost volumes associated with small refinery exemptions (SREs) and increase conventional biofuels beyond 15 billion gallons annually.

Inhofe’s letter urges the APA to “account for the ethanol blend wall when setting annual target volumes under the [RFS] reset requirements.” Within the letter, Inhofe and his colleagues argue that when the RFS was written, projected gasoline demand for 2020 was forecast to reach more than 170 billion gallons. Those projections have since dropped, with the U.S. Energy Information Administration currently predicting gasoline demand for 2020 to be approximately 142 billion gallons, and dropping to 137 billion gallons by 2022. “As a result of this stark change in projected demand, we courage the [EPA] to acknowledge this market reality when resetting the statutory targets such that the contribution of conventional biofuel is set below an implied 10 percent level for 2020, or 14.2 billion gallons.”

In response to the letter, Jessica Bennett, vice president of government and external affairs at the RFA, issued a statement stressing the intention of the RFS—which passed with overwhelming bipartisan support—was to expand the production and use of biofuels and “not to accommodate the oil industry’s monopoly over the gasoline market.”

Bennett pointed out that “oil companies have long sought a reduction in the RFS to levels that would leave the ethanol market stagnate.” She said the RFS was successful in dismantling the blend wall when the program was being implemented as intended by congress.

“Prior to the explosion of small refinery waivers, the national ethanol blend rate topped 10.7 percent, with several states where E85 is widely used experiencing blend rates considerably higher,” she said. “However, for the first time ever, last year, following more than 2.7 billion gallons of waived RFS requirements, both the ethanol blend rate and the total volume blended fell. Still, when EPA finalizes the E15 RVP rule later this month, it will stimulate significant new investment by gasoline marketers desiring to offer a higher quality, lower priced fuel for their consumers, and will rightly end any argument about a blend wall.”

“Rather than use the reset authority to lower conventional biofuel volumes, EPA should utilize its reset authority to reallocate lost volumes from its excessive use of small refinery waivers and increase conventional biofuel volumes beyond 15 billion gallons annually,” Bennett continued. “Again, the whole point of the RFS was to drive investments in the expanded use of domestically produced renewable fuels. Even former EPA Administrator Scott Pruitt recognized the success of conventional biofuels like ethanol and acknowledged that EPA could expand beyond 15 billion gallons. Unless we want to take our nation’s energy policy backwards, that’s exactly what EPA should do.”

Inhofe’s letter was signed by Sens. John Barrasso, R-Wyo.; John Boozman, R-Ark.; Bill Cassidy, R-La.; Shelley Moore Capito, R-W. Va.; Susan Collins, R-Maine; John Cornyn, R-Texas; Tom Cotton, R-Ark.; Steve Daines, R-Mont.; Mike Enzi, R-Wyo.; Cindy Hyde-Smit, R-Miss.; James Lankford, R-Okla.; John Kennedy, R-La.; Pat Toomey, R-Pa.; and Roger Wicker, R-Miss.

A full copy of the letter can be downloaded from Inhofe’s website.