NATSO submitted formal comments to the Environmental Protection Agency on August 17, outlining the off-highway fuel retailer community's concerns with how the Renewable Fuel Standard (RFS) has been implemented in recent months, while providing the agency several ideas for how the RFS can be improved. The comments are in response to the agency's proposed renewable fuel mandates for 2019. Those numbers will not be finalized until November.
"The RFS, when implemented properly, has proven to be an effective, market-based program that diversifies, enhances, and improves the emissions characteristics of the nation's fuel supply while lowering costs for consumers. The program's success has hinged on NATSO members' ability to acquire, blend, and sell biodiesel on a cost effective basis relative to traditional diesel fuel," NATSO wrote.
"For the past year, the [RFS] has not been implemented in the manner Congress intended" which was to incentivize fuel marketers to incorporate more biodiesel into their fuel supply, NATSO said. "The present rulemaking process," NATSO continued, "presents an easy opportunity for the agency to rectify the situation while at the same time increasing the production and consumption of home-grown advanced biofuels and lowering consumer fuel costs -- ultimately reducing the amount of money that consumers pay for the 70 percent of goods that are transported by truck in the United States."
The crux of NATSO's comments
dealt with the EPA's recent policy of liberally granting small refinery hardship exemptions, which is undercutting demand for advanced biofuels. "When these waivers are issued retroactively, as they have been over the past year, they function as de facto
mandate cuts in the RVOs, dramatically lowering RIN prices and, in turn, lowering demand for advanced biofuels. This outcome is inconsistent with Congress's goals for the Program," NATSO wrote.
NATSO suggested several ways that EPA can improve the RFS's implementation:
"At the very least, the agency must clearly acknowledge and articulate the standard by which it examines small refineries' requests for hardship waivers." NATSO added that EPA should disseminate this information to all market participants equitably and transparently.
Beyond this, NATSO told EPA that it "is necessary to acknowledge and respond to the effects that dozens of hardship waivers will have on the market that the [renewable fuel mandates] are designed to support. For the past year, EPA's approach has apparently been to simply resign itself to the fact that hardship waivers effectively result in lower RVOs and lower demand for advanced biofuels. Instead, the agency should be considering how to mitigate this effect."
Specifically, NATSO suggested that EPA "incorporate the new, more liberal standard for granting hardship waivers into other aspects of the RVO policymaking process. For example, EPA could revise its treatment of carryover RINs and/or allow for the partial backfilling of missing cellulosic volumes with non-cellulosic advanced biofuels to reflect the fact that hardship waivers will be more frequently granted."
NATSO will continue working closely with EPA and lawmakers on Capitol Hill on all aspects of the RFS.
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