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Call to declare RFS null and void

Hydrocarbon Engineering,

On 23rd July 2013, AFPM President Charles T. Drevna testified at a House Subcommittee on Energy and Power hearing called ‘Overview of the RFS Standard: Stakeholder Perspectives.’

Energy contract with the nation

Mr Drevna characterised 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 RFS, which called for massive amounts of renewable fuels to be blended into the nation’s transportation fuel supply.

The blendwall

One of the most urgent problems with the RF 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 supply. And, while refiners are often not the party blending ethanol into gasoline, they are the obligated party responsible for ensuring that all mandated levels are introduced to the US fuel supply. When the gasoline supply contains the maximum amount of ethanol it can handle, as is expected this year, refiners must purchase 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 up from 4 – 7 cents in January 2013, as much as US$ 1.48 for the week of July 15th, forcing refiners to make difficult decisions.

Quotes from Drevna

‘In 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. In short, Congress should declare the contract null and void and repeal the RFS.’

‘When 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 US market. Likewise, importers of gasoline, also obligated parties, will look elsewhere to market their products.’

‘Let 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.’

Adapted from press release by Claira Lloyd.

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