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BIO and the Advanced Ethanol Council Send Letter to White House RE:Maintaining the Methodological Integrity of the RFS

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On May 15, 2014, the Biotechnology Industry Organization (BIO), the Advanced Ethanol Council, and associated signatories sent a letter to the White House&nbsp;expressing concern about the Administration&rsquo;s impending decision around the Renewable Fuel Standard (RFS).</p>

RE: Maintaining the Methodological Integrity of the Renewable Fuel Standard (RFS)

Dear Mr. President,

On behalf of the Advanced Ethanol Council (AEC), the Biotechnology Industry Organization (BIO) and the signatories listed below, we are writing to express our concern about the Administration’s impending decision regarding the Renewable Fuel Standard (RFS).

As you know, the RFS requires oil companies to blend increasing volumes of low carbon biofuels over time. The RFS is necessary because the highly consolidated, vertically integrated oil industry is not otherwise going to cede market share to renewable fuels. It is an unfortunate reality that current fuel markets do not properly reward innovation, and that any effort to curb oil dependence and reduce carbon emissions in the sector will require effective policies like the RFS.

The issue in question is the Administration’s proposal to drastically cut the RFS blending targets and fundamentally change how the RFS works. While we are hopeful that the Administration recognizes that its proposed cuts are too aggressive, and intends to increase the volumes in the final rule, it is not clear that the Administration yet recognizes that its proposal changes how the RFS works at a fundamental level, and that this methodological shift would effectively undercut advanced biofuel projects under development.

Almost 40 advanced biofuel companies, which together produce the lowest carbon fuel in the world, submitted a letter to your office in late 2013 expressing concern about your new methodology.i To reduce the 2014 blending requirements and volumes in future years, EPA is proposing to use its general waiver authority based on “inadequate domestic supply.” But EPA is putting forward a novel interpretation of the word “supply” to mean the ability of current infrastructure to deliver renewable fuel blends to consumers, instead of the available supply of renewable fuel to obligated parties. We believe that this new interpretation is inconsistent with the plain meaning of the statute and its legislative history. But the bigger issue is that this interpretation has the practical effect of handing the future trajectory of the RFS to the oil industry by virtue of the fact that the oil industry itself controls the distribution of fuel to consumers. Simply put, the proposal converts obligated parties under the Clean Air Act into non-obligated parties.

As part of the deliberative process, it is critical for the Administration to understand exactly who this policy shift would impact. Some have suggested that this methodological change only impacts first generation biofuels because it is being proposed in response to concerns about that compliance pool. But the agency’s shift is actually systemic in nature, and therefore applies to how investors would look at all types of qualifying biofuel under the RFS. The threat that oil companies could simply ignore the RFS vastly increases supply-chain risk for new projects, in addition to those already in the ground. Given that more than 90 percent of future blending obligations under the RFS are for advanced biofuels, the Administration’s new methodology would actually scuttle U.S. investment in advanced, low-carbon biofuels in direct conflict with the Climate Action Plan and your Administration’s goals with regard to reducing oil dependence and promoting advanced biorefineries via USDA and DOE programs.

Visit the link below to view the letter in its entirety.

The AEC, BIO and associated signatories' letter to the White House re Maintaining the Methodological Integrity of the Renewable Fuel Standard (RFS)