David Fialkov, NATSO's Vice President of Government Relations, testified Aug. 1 at an Environmental Protection Agency (EPA) hearing examining the Agency's proposed 2018 renewable volume obligations under the Renewable Fuel Standard (RFS).
At the hearing, Fialkov said that EPA has, by and large, aptly implemented the RFS in the face of extensive political and substantive challenges. Travel plaza operators and fuel marketers are fuel buyers and price takers, Fialkov said, and in general prefer long markets with a diverse array of supply options at their disposal. The RFS has helped facilitate this type of market environment by creating a regulatory regime where NATSO members can incorporate renewable fuels such as biodiesel into their fuel supply as a means of making diesel fuel less expensive for customers.
Although NATSO will be filing more detailed written comments with the agency in the coming weeks, Fialkov did provide some high level reactions to EPA's proposal. First, he said that he thought there was room for growth in the EPA's mandate for biomass-based diesel and advanced biofuels. This growth should come primarily in the form of biomass-based diesel as opposed to advanced biofuels, Fialkov said, because increasing the mandate for advanced biofuels would incentivize additional imports of Brazilian sugar cane ethanol, which could lead to blend wall concerns. "There is no blend wall for biodiesel," Fialkov said, underscoring this point.
Despite there being some room for growth in the biomass-based diesel mandate, Fialkov said there is not as much room for growth as the biodiesel production industry has been advocating. This is all the more true in light of domestic biodiesel producers' recent efforts to close off imports that could compete with domestic product. For example, earlier this year the National Biodiesel Board (NBB) filed a case with the International Trade Commission seeking to close off imports from Argentina and Indonesia. The NBB has also urged Congress to convert the tax credit to a producer tax credit, which would functionally impose a $1.00/gallon tariff on imported product. NATSO strongly opposes these efforts.
EPA will accept public comment on the proposal for the next month, and NATSO will file more detailed comments with the agency. The final rule is expected to be announced in late November or December.
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