GAO Says Renewable Fuel Standard ‘Broken,’ American Petroleum Institute and Advanced Biofuels Association Say Don’t Change Point of Obligation

The oil and gas industry has been gunning for the Renewable Fuel Standard for years.

This effort got an unexpected boost from the US Government Accountability Office yesterday when the GAO released two reports that say the Renewable Fuel Standard, which mandates the volumes of ethanol and other renewable fuels that must be blended into US gasoline, is unlikely to meet its goals. These include reducing greenhouse gas emissions and expanding the nation’s renewable fuels sector.

The GAO says this is because production of advanced biofuels is limited, as is the potential for expanding their production by 2022.

The reports come less than a week after the EPA announced the final renewable fuel volumes for next year, which raise the levels from 18.11 billion gallons this year to 19.28 billion gallons in 2017. This is a 5 percent increase from the proposed 2017 levels — 18.8 billion gallons of renewable fuel — that the EPA announced in May. About 15 billion gallons of this will come from conventional corn-based ethanol.

“The GAO concluded the RFS is broken and we agree,” said American Petroleum Institute downstream group director Frank Macchiarola in a statement. “The government findings that the ethanol mandate is not working only strengthen our case to significantly overhaul the program.”

The ethanol industry, on the other hand maintains that the RFS is working and should be upheld.

“The GAO reports discussed today do not shed any new light on the RFS,” said Growth Energy CEO Emily Skor in a statement. “It is our country’s most successful energy and climate policy that strengthens our nation’s energy security, while also reducing harmful emissions.

“Corn ethanol reduces greenhouse gas emissions by an average of 34 percent compared to conventional gasoline while saving consumers money at the pump, displacing toxic additives found in gasoline, creating American jobs and adding high-performance octane to the country’s fuel supply. Ethanol producers have shown time and time again that they are capable of meeting the goals for conventional biofuel production under the RFS.”

One thing that both industry groups — along with other trade organizations representing about 13,000 companies across the transportation fuel supply chain — is that the point of obligation under the Renewable Fuel Standard should not change.

Under the current RFS rules, oil refiners are the parties obligated to blend more renewable fuel into the nation’s transportation fuel supply. Several oil refiners have petitioned the EPA to change the obligated party from the refinery to the owners of the gasoline before it is blended for retail sale.

In a joint letter to the EPA, seven trade groups — American Petroleum Institute, Advanced Biofuels Association, Growth Energy, National Association of Convenience Stores, National Association of Truck Stop Operators, Petroleum Marketers Association of America and Society of Independent Gasoline Marketers of America — urged the agency to deny the petitions.

Also yesterday, the Senate Homeland Security and Governmental Affairs Oversight Subcommittee held a hearing to discuss the GAO reports about the Renewable Fuel Standard.

At the hearing, ranking member Sen. Heidi Heitkamp (D-SD) referenced the joint RFS letter and asked that it be introduced into the record. Heitkamp is also being considered by the Trump transition team to head the EPA.

“It is signed by a number of groups who frequently don’t find their names on the same letter,” Heitkamp said. “They are suggesting and expressing their unified position in opposition of efforts by petitioners to move the point of obligation in compliance. You’ve got [American Petroleum Institute] and the [Renewable Fuels Association] on the same letter — that’s pretty remarkable. So, I think that might speak some volumes in terms of answering the petition. Obviously, we hope that you give full consideration, but these interest groups have been long involved in this, and for them to share a common opinion might put a little more weight on what they are doing or what they are suggesting.”