Renewable Fuels Nebraska opposes ‘any change’ to RFS point of obligation

Renewable Fuels Nebraska, a trade body for the US ethanol industry, has issued a statement stating that it is “strongly opposed to any change in the point of obligation”.

The statement follows last week’s news of rumours from the Trump administration that it would remove oil refiner’s obligation to blend ethanol with petro under the Renewable Fuel Standard (RFS) programme.

In response to unconfirmed reports concerning the possibility of a change to the point of obligation under the RFS, RFN executive director Mark Palmer said: “Since its inception in 2005, the RFS has been a pillar of our domestic energy policy. Recently, there have been calls for a change in the RFS by moving the point of obligation.

“RFN remains strongly opposed to any change in the Point of Obligation if it would undermine the integrity of that important program. RFN is committed to the RFS because it is good public policy, good for consumers, and good for Nebraska.

“The challenge facing the Nebraska ethanol industry today is access to the consumer. RFN supports measures that would eliminate barriers to the increased sale of E15 and open new markets for domestic renewable fuels.”

RFN represents ethanol producers in the state of Nebraska, the second largest ethanol producing state in the US producing nearly 2.5 billion gallons, and home to 25 plants.

Spilt

Last week, trade association Fuels America cut ties with counterpart Renewable Fuels Association (RFA) over the issue. 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.

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