– American Fuel & Petrochemical Manufacturers (AFPM) President Charles T.
Drevna testified today at a House
Subcommittee on Energy and Power hearing titled “Overview of the Renewable Fuel
Standard: Stakeholder Perspectives.”
his remarks, Drevna characterized Congress’ enactment of the Energy
Independence and Security Act of 2007 as a contract with the American people,
which promised significant steps toward energy independence and national
security and added environmental protections. One major component of this
energy legislation was the Renewable Fuel Standard (RFS), which called for
massive amounts of renewable fuels to be blended into the nation’s
transportation fuel supply.
2013, we now know that the RFS is a program based upon erroneous market
assumption, obstacles that prevent the safe consumption of ethanol at
increasing mandated levels, and many other unintended negative consequences,”
Drevna said. “In short, Congress should declare the contract null and void and
repeal the RFS.”
of the most urgent problems with the RFS is the E10 blendwall, which represents
the maximum amount of ethanol that can be blended safely into gasoline without
damaging engines. This year consumer consumption will fall short of meeting the
mandated volumes of ethanol that are required to be blended into the fuel
while refiners are often not the party blending ethanol into
gasoline, they are the obligated party responsible for ensuring that all
mandated levels of ethanol are introduced into the nation’s fuel supply.When the gasoline supply
contains the maximum amount of ethanol it can handle, as is expected this year,
refiners must purchase ethanol credits or Renewable Identification Numbers
(RINs), to make-up the shortfall and show compliance with the RFS. Drevna told
the Subcommittee that this blendwall has driven the price of RINs from 4 to 7
cents in January to as much as $1.48 for the Week of July 15, forcing refiners
to make difficult decisions.
refiners are unable to purchase sufficient RINs for compliance, they may be
left with only bad options, which force them to reduce the amount of fuel they
supply to the U.S. market. Likewise, importers of gasoline, also obligated
parties, will look elsewhere to market their product,” Drevna warned.
me be clear, AFPM is not anti-ethanol or anti-biofuels, both can play an
important role in the fuel mix, provided they are safely integrated into the
fuel supply and are accepted by consumers. AFPM does, however, oppose mandates
and subsidies because they limit consumer choice, stifle innovation, and in the
case of the RFS, are harmful to consumers,” Drevna ended.