Ethanol industry responds to API's latest RFS attack

By Erin Voegele | March 20, 2013

The U.S. ethanol industry is responding to the oil industry’s latest attack on the renewable fuel standard (RFS). On March 20, the American Petroleum Institute released the results of a new study conducted by NERA Economic Consulting that claims the RFS will result in severe economic consequences by 2015. However, the biofuels industry is disputing the study’s findings.

According to information published by the API, the study claims the RFS will result in decreased U.S. GDP, decreased take-home pay for American workers, increases in the costs to manufacture diesel and gasoline, and encourage the export of refined products.

Prior to the study’s release, the Fuels America coalition hosted a media call to preemptively respond to the anticipated results of API’s study. Participants in the call aimed to set the record straight on the origins of the blend wall, the renewable identification number (RIN) market, and the benefits of E15. The call included comments from Tom Buis, CEO of Growth Energy; Brooke Coleman, executive director of the Advanced Ethanol Council; Bob Dinneen, president of the Renewable Fuels Association; Jim Greenwood, president and CEO of the Biotechnology Industry Organization; Adam Monroe, regional president of Novozymes; and Christopher Standlee, executive vice president of Abengoa Bioenergy U.S. Holding Inc.

The Fuels America coalition also released a statement following API’s release, disputing its claims. “As sure as moon waxes and wanes, the American Petroleum Institute buys studies to support their self-interested views,” said the coalition. “Their most recent study predictably attacks their main competitor: renewable fuel. “The oil industry has been complaining about the Renewable Fuel Standard, yet they are the ones who failed to invest in the infrastructure necessary to avoid the compliance mechanism that has them up in arms. Everyone knew this investment would be necessary many years ago, and in typical form, the oil industry is threatening to pass the cost of their own inaction on to consumers. Since oil price is set on the world market, what you pay at the pump relies on what happens to world events that we cannot control, like the Cyprus bailout that is being debated today. If we want lower and more stable prices at the pump, we have to wean our way off of oil, and replace it with inexpensive and homegrown renewable fuel.”

The American Coalition for Ethanol has also responded to API’s study. “The RFS is not about the oil industry’s comfort; it is about providing cleaner American-made alternatives to consumers,” said Brian Jennings, executive vice president of ACE. “The RFS costs taxpayers nothing and is doing exactly what Congress intended; saving consumers money at the pump and providing them access to new affordable blends such as E15. The RFS is also disrupting the lucrative choke-hold oil companies have on the market. As a result, Big Oil is desperate to repeal the RFS this year. With respect to renewable identification numbers (RINs), every time a refiner blends a gallon of ethanol with gasoline, they get a RIN for free. When they purchase more ethanol than the annual RFS obligation, RINs are a reward and provide value to them. The fact there are 2.5 billion excess RINs available for use in 2013 is proof that over-compliance has been commonplace with oil companies. Refiners only have to buy RINs if they refuse to follow the law, and that’s what this is about—they have had more than six years to evolve and comply with the law, but have refused to adapt and change. Most refiners are trying to keep an oversupply of RINs on hand, to be sure that they are able to control the marketplace. The current Big Oil hue and cry isn’t about ethanol supply; it is fear of actual competition.”