NATSO submitted comments to the Environmental Protection Agency on the Agency's proposed renewable fuel mandates for 2017, and biodiesel mandates for 2018. Every year EPA announces mandatory renewable fuel obligations for refiners. NATSO comments on the proposal -- which will likely be finalized in late November -- were largely supportive. Read the comments here.
On July 11, NATSO submitted formal comments to the Environmental Protection Agency (EPA) on EPA's proposed renewable fuel volume obligations for 2017, and biodiesel mandates for 2018.
Under the Renewable Fuel Standard (RFS), every fuel refiner and importer is required to generate an increasing volume of renewable fuel annually. EPA has released proposed numbers for 2017 and biomass-based diesel numbers for 2018.
Many refiners are unable to directly generate their mandatory volume of renewable fuel; in these instances, they rely on others to introduce renewable fuel into commerce for them. Many NATSO members do this in a manner that enables them to sell fuel at a lower price and realize greater margins on sales. NATSO's comments encouraged EPA to maintain the current renewable fuels regulatory regime, as it tends to benefits fuel retailers and marketers. (For a more detailed discussion of how NATSO members can understand and participate in the RFS, read The Economics of RINs here.
Below is a brief overview of NATSO's comments to EPA, which can be read in their entirety here.
-- NATSO supports EPA’s exercise of its statutory waiver authority to avoid the blend wall and tie RVOs to market realities.
-- EPA faces a delicate balance with respect to biomass-based diesel: On the one hand, increasing mandates under the RFS can enable NATSO members to sell biodiesel and renewable diesel to consumers at lower prices and thereby increase consumer demand for these products; at the same time, if obligations are set too high, prices for diesel fuel could potentially rise, which would have an adverse effect on NATSO members and the U.S. economy as a whole.
-- As it proceeds with this rulemaking, EPA must be cognizant of the variety of policy and economic factors that influence the price of – and thus the market demand for – biodiesel and renewable diesel. Any policy changes that would lead to an increase in the price of biodiesel and renewable diesel in the United States would lower consumer demand for those products and restrict the Agency’s ability to establish ambitious renewable volume obligations.
-- EPA should explicitly reject the idea of revising the definition of “obligated party” under the RFS. Refiners and importers are obligated parties because that is the only way to ensure that renewable fuels are integrated into the nation’s fuel supply. If fuel blenders and retailers rather than refiners and importers were obligated parties, the RFS’s objectives would not be achieved.
-- The current policy has worked effectively: it creates a strong financial incentive for downstream fuel marketers to blend renewable fuels into the fuel supply all while lowering the prices at the pump for consumers. This is government policy at its finest: Establishing a market-based financial inducement for private actors to engage in behavior that is considered beneficial to society at large.
-- Changing the point of obligation would have the opposite effect of discouraging downstream fuel marketers from blending renewable fuels into the fuel supply, reducing competition and thereby raising the prices at the pump for consumers.
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