EPA’S RFS RVOs: WTF?

After reading EPA’s proposed rule for the RFS RVO numbers, Ron Lamberty of ACE thought, “What’re they figuring?” This column appears in the August issue of EPM.
By Ron Lamberty | July 17, 2015

When the U.S. EPA dumped the renewable fuel standard’s (RFS) required volume obligation (RVO) numbers for 2014, 2015 and 2016 on the last Friday in May, I’m sure many of you thought, “WTF?” Me too. I thought, “What’re they figuring?”

OK, I thought that other version, too—but after reading EPA’s proposed rule, I wondered how they ended up where they did.  Sometimes, they seem to “get it.” They appear to have learned RINs don’t increase fuel prices and even seem to get why we complain about obligated parties refusing to comply with the law. But in the end, EPA seems to channel Homer Simpson when he said “Just because I don't care doesn't mean that I don't understand.” They get it … but they’re doing nothing about it.

But maybe they don’t get it. EPA laments E15’s lack of impact on ethanol volume while ignoring all the roadblocks they’ve created themselves. They don’t seem to realize every station that sells E15 sells more than 10 percent ethanol overall, exceeding the so-called “blend wall.” There is ample proof most stations could sell E15 with little equipment expense, and the absence of real-world damage from E15 should give pause to EPA’s belief in both those ghost stories. But it hasn’t.

Instead EPA is “figuring” heavily on the blendwall in its proposed RVOs for 2015 and 2016. The term blendwall is used 34 times in the rule, and EPA says “The ability to go beyond the E10 blendwall is a function of actions taken by various fuel market participants, including obligated parties, renewable fuel producers, distributors and marketers, gasoline and diesel retailers, and consumers.” Having apparently bought in to refiners’ arguments that everyone has to pitch in to get past the blendwall, EPA seems to be ignoring the fact that everyone else already has. The only “fuel market participants” that have refused to take a single step to get over the blendwall are the obligated parties—who are, by definition, the only ones required by law to do so. 

Renewable fuel producers have been ready to provide the required volumes for more than two years.They applied for a waiver for E15 to provide an option motorists could use in existing vehicles, and fuel marketers could blend and sell using existing equipment. The ethanol industry has spent millions on promotional and educational programs, all the while battling oil-industry misinformation campaigns and efforts to take away every tax break or grant program that would help marketers help oil companies meet the statutory RVOs.

Auto manufacturers have produced vehicles capable of using 85 percent ethanol for almost 20 years, and are going on year four of cars and light trucks that specifically approve E15 as a fuel. All in all, cars and light trucks built and warrantied for E15 outnumber “premium only” vehicles about three to one, and diesel cars and light trucks by five or six to one. Even if EPA doesn’t trust its own numbers, manufacturer approved E15 vehicles are more widely available than all the premium and diesel vehicles on the road.

With those numbers in mind, obligated parties still require branded stations to sell premium gasoline, and diesel fuel is widely available, while oil company supply agreements specifically prevent station owners from offering E15. Oil companies have also sued EPA every year to avoid complying with the RFS. Those are the actions taken by obligated parties to get past the blendwall. They don’t want to. But that’s understandable. That’s Big Oil being Big Oil.

No, the real problem with the weakening of the RFS is that the obligated parties know they aren’t really obligated. All Big Oil has to do is read the last two proposed rules to know EPA doesn’t want to enforce the law. They go to great lengths to redefine supply as what oil companies are comfortable selling and defend Big Oil blendwall mythology while ignoring all the roadblocks they’ve jointly established to make sure the imaginary wall stays in place.

The RFS will work if EPA remembers what their E and P stand for, and do their job. Big Oil has responded like this to every fuel regulation change in history, EPA has always held its ground, and Big Oil has always (reluctantly) complied. They would this time, too.


 
Author: Ron Lamberty
Senior Vice President
American Coalition for Ethanol
605-334-3381
rlamberty@ethanol.org