US biofuel trade group cuts ties with Renewable Fuels Association over changing the point of RFS obligation

US biofuels lobby group Fuels America has disassociated itself with the counterpart Renewable Fuels Association (RFA) over plans to change the Renewable Fuel Standard (RFS).

Fuels America represents a diverse coalition, including farmers and companies such as Archer Daniels Midland and DuPont.

The tumult began after Bob Dinneen, chief executive of the RFA, issued a statement saying the association had “received a call from an official with the Trump administration” informing it that a pending White House order would remove oil refiner’s obligation to blend ethanol with petrol.

The RFS would be maintained, but responsibility for compliance would be shifted from refiners to fuel blenders.

Bloomberg reported that the RFA reached a deal with Carl Icahn, the billionaire investor who has attached the ethanol rules, and presented a joint plan for reform to the White House.

Icahn is a special adviser to President Trump on regulation.

Background

The issue over whether to change the point of obligation in relation to the RFS has been a controversial one. It relates to the point in the fuel supply chain in which a party becomes obligated to comply with the RFS requirements.

This can be accomplished through a regulatory process by changing the definition of obligated party. When passing the Energy Independence and Security Act of 2007 Congress left it to the US Environmental Protection Agency to define an obligated party.

EPA defined an obligated party in its initial rulemaking as a refiner or importer and EPA explained then that they considered placing the point of obligation at the terminal.

The recent reported rule change could have financial consequences running into hundreds of millions of dollars per year for some companies. It could potentially benefit oil refiners, but could hurt some fuel marketers and retailers.

‘Affordable biofuel options’

In a statement, Fuels America said: “In keeping with our mission, we adamantly oppose any effort to derail the RFS by shifting the point of obligation and exempting certain refiners and fuel importers from their responsibility to deliver cleaner, more affordable biofuel options to consumers.

“Carl Icahn, in his conflicted role as owner of CVR Refining and special White House advisor, has sought to mislead biofuel advocates into accepting rewrites to the RFS in exchange for changes to outdated EPA regulations that limit summertime sales of ethanol.

“Yet, Mr Icahn has no authority to dictate EPA policy, and a waiver to Reid Vapor Pressure (RVP) limits would be meaningless if retailers lost the incentive to sell higher biofuel blends, as Icahn proposes. His purported deal offers nothing for those who care about increasing the role of homegrown biofuel in meeting America’s energy needs, and it is a disservice to hundreds of thousands of farmers and workers in rural America that depend on a strong market for U.S. biofuels.

“Despite our opposition, the Renewable Fuels Association (RFA) has elected to lend its support to Mr Icahn’s efforts. Accordingly, RFA’s position is no longer aligned with America’s biofuel industry and the Fuels America coalition has resolved to sever ties with the group.”

This story was written by Liz Gyekye, editor of Biofuels International.