The Renewable Fuel Standard (RFS) “has impacted the price of corn,” and is a concern for engines in a “marine environment,” as well as having statutory levels for biofuels that are “unachievable,” said Janet McCabe, acting assistant administrator of the Office of Air and Radiation at the U.S. Environmental Protection Agency (EPA) at a Senate Environment and Public Works (EPW) Committee hearing held on Wednesday regarding RFS Oversight.
McCabe fielded a number of questions from the panel. Given the jurisdiction of the EPW committee many of the questions were targeted at carbon emissions, fuel issues, and air quality.
Concerns surrounding food prices were also discussed at the hearing. In response to a question by Senator Tom Carper (D-DE), McCabe said she was “not an expert in commodity prices, but yes, I’ve heard from sources that the RFS has impacted the price of corn.”
Senator John Barrasso (R-WY) highlighted the impact the RFS has had on corn and soybean prices and it is impact on the dairy, meat, and poultry industries. Senator David Vitter (R-LA) pointed out the economic impact on the consumer with ethanol now being more expensive than gasoline,
There was a general consensus among the EPW panel members that, when it comes to the RFS, EPA has done a poor job of administering the program, especially when it comes to releasing the annual required volume obligations on time. Only twice in since 2009, has EPA released the final rule on time.
For 2017, McCabe made a personal commitment to get the final rule out on time, but noted she “doesn’t rule the world” and unforeseen circumstances could cause delay. EPA’s official position remains that it intends to meet the statutory deadline.
On the topic of meeting statutory requirements as provided for by the 2007 Energy Independence and Security Act, Senator Deb Fischer (R-NE) chided McCabe for EPA making the “arbitrary” decision to lower the volumes of biofuels below their statutory levels and thus sending the wrong signal to the industry.
In fact, however, EPA increased the 2016 volumes above the blendwall and retroactively increased the volumes for 2014 and 2015. McCabe confirmed that from 2014 to 2016 the RFS expands by 1.8 billion gallons, or 11 percent, saying “the statutory levels are unachievable.”
When questioned by Senator Barrasso about whether the administration agrees with those organizations that oppose the RFS, Administrator McCabe replied that EPA would willingly provide Congress with technical advice on how to reform the RFS.
Specific suggestions for reform were offered by former Obama White House Special Assistant to the President for Energy and Environment Ronald Minsk. Minsk suggestions included lowering the mandate for conventional corn-based ethanol because the failure of the RFS have been in creating new second generation renewable fuels and in forcing high and volatile RINs prices.
On the topic of eliminating the mandate for conventional corn ethanol, Chairman James Inhofe (R-OK), questioned Lucian Pugliaresi, Energy Policy Research Foundation, what would happen to ethanol if the RFS was repealed. Pugliaresi responded that “corn ethanol is a mature and competitive industry” and would find a place in the market, both domestically and internationally. “The problem with the program is not ethanol, but the mandate which prohibits normal market adjustments.” Pugliaresi said.
