EPA refuses petition to change point of obligation under RFS

The US Environmental Protection Agency (EPA) has proposed denying a petition by a group of merchant oil refiners to change the point of obligation (PO) under the Renewable Fuel Standard (RFS).

Under the current RFS structure, oil refiners are the parties obligated to blend more renewable fuel into the nation’s transportation fuel supply.

The petition, filed by Valero Energy Corp. in February, seeks to change the obligated party from the refinery to those entities that own petrol before it is blended for retail sale.

Making this change would address supply constraints on renewable fuel in the transportation fuel market that impede the market’s ability to respond to renewable fuel volume mandates, the petition states.

The EPA will hold a 60-day comment period for interested parties to offer their comments.

The agency’s decision has been welcomed not only by actors in the oil and transport sector, but also by the US ethanol trade association Growth Energy.

The American Petroleum Institute, which is working to repeal the RFS as a whole, called the proposed change “burdensome” and congratulated EPA for denying it.

“[The change] would add complexity and have negative impacts to a programme that we believe is already deeply flawed. In short, moving the point of obligation would be irresponsible, and EPA’s proposal confirms this,” said Frank Macchiarola, API Downstream group director.

“Requiring businesses to blend increasing amounts of ethanol into gasoline, which consumers have demonstrated they don’t particularly want or need, is the central flaw of the RFS mandate that must be addressed,” he added.

The travel plaza and truck stop industry’s professional association NATSO said the current PO “represents the most effective means of achieving the RFS's obligation”.

“In evaluating the efficacy of the RFS compliance structure, EPA has determined that the current PO is successfully achieving the agency's objectives of displacing petroleum-based fuel with renewable substitutes in a manner that stabilises price, deepens supply options, all while incentivising fuel marketers to blend and sell renewable fuels,” Lisa Mullings, NATSO president and CEO.

Emily Skor, CEO at Growth Energy, joined API and NATSO in praising EPA for the decision, which she called the “correct” one to make.

“The RFS is working and refiners have had over 11 years to comply with it. The current structure appropriately incentivises marketers to blend additional biofuels, and encourages the availability of higher-level ethanol blends to retailers who wish to sell them.

“The bottom line is that the current PO encourages consumer choice and cost savings at the pump, and any change would undermine the intent of the RFS and reward those parties who have refused to comply with the intent of the law,” Skor said.