API Calls for RFS Repeal

API Calls for RFS Repeal
API is gauging support in the next Congress for legislation to repeal the Renewable Fuels Standard.

The American Petroleum Institute (API) announced Tuesday one of its legislative priorities for the 113th Congress, which convenes in January, is to scrap the federal program designed to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel.

"We believe the Renewable Fuels Standard [RFS] is unworkable and should be repealed," API Downstream Group Director Robert Greco told reporters in a conference call Tuesday.

The RFS requires refiners and importers of gasoline and diesel to blend at least 36 billion gallons of renewable fuel into their petroleum stocks annually by 2022. The Energy Policy Act (EPAct) of 2005 established the RFS program. Initially, it required 7.5 billion gallons of renewable fuel to be blended into gasoline by 2012.

The Energy Independence and Security Act (EISA) of 2007 expanded the RFS program. EISA extended the mandate to diesel, raised the renewable fuel volume to be blended to 36 billion gallons by 2022 and created new categories of renewable fuel with their own unique volume requirements. In addition, the 2007 law required EPA to ensure that each category of renewable fuel emits fewer greenhouse gases than the petroleum-based fuel it replaces.

"Despite repeated and ongoing efforts to address the program's shortcomings -- through regulatory petitions, legal actions and suggested solutions to implementation concerns -- little has been done to make the program workable, and sometimes actions have been taken that make matters worse," said Greco.

"There is a fundamental flaw in the enabling statute so the only way to fix it is to scrap the law and start over if Congress believes such a program is necessary."

The partisan makeup of the U.S. legislative branch will remain largely unchanged for at least another two years. The Republicans will maintain control of the House of Representatives in the 113th Congress, holding 234 out of 435 seats. In the Senate, the Democrats will enjoy the allegiance of 55 of the upper house's 100 members.

During Tuesday's conference call, API officials said that a "bipartisan" group of 26 senators and 125 members of Congress are "concerned" about the RFS mandate and how it is being implemented. They declined to specify which legislators might sponsor bills to scrap the RFS, but they said that API is "looking at levels of support" and will work to "educate" members of the 113th about the issue.

Greco also argued the RFS does not take into account the dramatically different U.S. energy supply outlook that has emerged over the past several years.

"The other critical reality is that the RFS program was enacted at a time when our nation's energy landscape was far different," continued Greco. "With the current boom in domestic oil and natural gas development, we are steadily reducing our foreign energy dependence, well beyond what the RFS program has achieved."

Greco also said that increasing use of domestic natural gas supplies has helped to drive a decline in greenhouse gas emissions.

"The notion that we need a Renewable Fuels Standard to promote energy independence and security, as the 2007 statute is named, has been turned on its head by the tremendous growth in domestic oil and natural gas," Greco said.

In response to API's call for a repeal of the RFS, the head of the Renewable Fuels Association (RFA) characterized the EPA mandate as a boon for consumers and proponents of greater energy self-sufficiency.

"Dog bites man," Bob Dinneen, president and CEO of the RFA, countered on his organization's website. "API wants to repeal a highly successful program that has reduced gasoline imports and stimulated investment in renewable energy resources."

"API doesn't like the RFS because it has taken 10 percent of their barrel and reduced consumer costs," concluded Dinneen. "Americans like and support the RFS for exactly those reasons."

Matthew V. Veazey has written about the upstream and downstream O&G sectors for more than a decade. Email Matthew at mveazey@downstreamtoday.com. Twitter: @MatthewVVeazey

Matthew V. Veazey has written about the oil and gas industry since 2000. Email Matthew at mveazey@rigzone.com

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