April 28, 2020

ICYMI: ConservAmerica Signs Letter Asking the Administration to Waive Renewable Fuel Standard 

WASHINGTON, DC – ConservAmerica this week joined 23 conservative groups on a letter to President Donald Trump urging him to support badly needed reforms to the Renewable Fuel Standard (RFS) program. As conservatives, we believe that market-distorting government mandates are harmful to the economy and interfere with the natural balance present in a free market, particularly as we look to recover from the coronavirus pandemic.

FOR IMMEDIATE RELEASE

April 28, 2020

CONTACT: media@conservamerica.org

(202) 285 6783

ConservAmerica Signs Letter Asking the Administration to Waive Renewable Fuel Standard

The full letter is below or can be downloaded here.

ConservAmerica is a national nonprofit organization committed to developing and advancing market-based solutions to improve America’s energy and environmental security and economic prosperity.

April 28, 2020

The Honorable Donald J. Trump
President of the United States
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President:

We write in strong support of the swift action your administration has taken in order to remove unnecessary barriers and red tape to improve COVID-19 response and economic recovery. The pandemic has underscored the need for permanent regulatory reform in a variety of areas, and we agree that work to expand prosperity on behalf of the American people must continue.1

One area that warrants immediate attention is the Renewable Fuel Standard (RFS).

Our organizations have consistently pointed out the clear shortcomings of the RFS, a market-distorting boondoggle that mandates consumer demand for politically connected biofuel companies at the expense of hard-working Americans and the environment. Inaccurate projections from 2005 and 2007, an inconsistent annual standard-setting and waiver process, and Congressional inaction, punctuated by agency infighting, underscores the need for repeal of the program.

COVID-19 and the government’s response to it demonstrates the fundamental problem with the RFS, as this mandate exceeds the amount of biofuels that consumers want or need and will result in unnecessary economic harm. The pandemic demonstrates why it is so problematic to rely on short- or long-term biofuel projections by Congress or regulators and to require annual volumetric standards in a dynamic marketplace with ever-changing supplies and consumer demand.

Therefore, we urge you to revisit the recently established 2020 RFS volumes and direct the U.S. Environmental Protection Agency (EPA) to build upon recent waivers to ensure the availability of gasoline2 by waiving these biofuel requirements for the remainder of 2020. Section 211(o)(7) of the Clean Air Act allows the EPA Administrator to waive RFS volumes if, after notice and opportunity for comment, he determines that there is inadequate domestic supply or that implementation of the RFS would severely harm the economy or environment of a state, a region, or the United States. This is clearly the case for four reasons.

First, 2020 RFS volumes will dramatically exceed consumer demand for biofuels, resulting in greater compliance costs, skyrocketing prices for Renewable Identification Numbers (RINs), and bureaucratic nightmares. When EPA finalized its 15 billion-gallon standards in December 2019 for these volumes, it assumed gasoline consumption of approximately 150 billion gallons. Their conclusions that these standards were “reasonably attainable in 2020” and that they would not cause or significantly contribute to “harm to an industry, or to a State, region, or the United States” were based on the Energy Information Administration’s (EIA) projection of total gasoline demand in 2020 and the highest historical ethanol concentration of just over 10.1 percent (a number guaranteed to be dramatically exceeded).3 These standards became effective on April 6, and the administration should reevaluate its conclusions based on the pandemic disrupting these underlying assumptions.

Consumers do not want or need, and the market cannot physically or legally bear, ethanol volumes above roughly 10 percent of the gasoline supply. Even with steady gasoline demand, 2020 RFS volumes were likely to exceed consumer demand by at least two billion gallons of ethanol, a problem compounded by uncertainty over EPA granting certain retrospective waivers. Recently, the ethanol industry has incorrectly claimed that EPA must adjust its annual percentage standards to require a full 15 billion gallons of ethanol or the Agency “will be violating the RFS statute which amounts to an illegal waiver of blending volumes.”4

Second, 2020 RFS volumes are based on gasoline demand assumptions that are clearly inaccurate. As a “result of the disruptions to economic and business activity because of COVID-19 and the strict containment measures that have dramatically reduced all forms of travel,”5 government and industry forecast dramatic reductions in gasoline demand for the bulk of 2020, with projections as high as a 20 percent year-over-year drop and a greater than 50 percent reduction in the short-run.6 EPA’s 2020 RFS volume requirement for conventional renewable fuel (ethanol) is an implied 15 billion gallons, despite these realities.

Third, affordable mobility is more important than ever in a time of social distancing, and increased prices or lack of availability of transportation fuel disproportionately impact low- and fixed-income individuals. According to AAA, an organization which has raised concerns that ethanol blends above 10 percent can damage vehicles and confuse consumers,7 gas prices in the continental United States continue to be very low but vary widely across different states. As the economy recovers, we are concerned that an unachievable mandate, along with production cuts, supply disruptions, or any future petroleum protectionism, could contribute to increased prices at the worst possible time.

Fourth, aided by the removal of certain barriers by the FDA, ethanol refiners have found new markets in producing hand sanitizer, a product demanded by hospitals, businesses, and citizens during the COVID- 19 crisis.8 Failing to waive the 2020 RFS volumes could divert critical resources from needed sanitizer production to an irrational mandate in the face of falling demand.

It is not reasonable to expect RFS levels to be met this year. The current economic and health circumstances would make RFS compliance an additional burden to the American economy and slow the recovery once America is open for business. This experience should also inform the administration as it sets future RFS volumes, including under its authority and obligation to modify 2020 – 2022 targets (as a result of volume targets unmet) as well as after 2022.

Sincerely,

ICYMI: ConservAmerica Signs Letter Asking the Administration to Waive Renewable Fuel Standard&nbsp;

ConservAmerica Signs Letter Asking the Administration to Waive Renewable Fuel Standard

ICYMI: ConservAmerica Signs Letter Asking the Administration to Waive Renewable Fuel Standard