Refiners ask Congress to scrap renewable fuels mandate

The oil industry is launching an aggressive push to scrap a national renewable fuels mandate it says is “unworkable” and outdated.

The American Petroleum Institute went public with the campaign on Tuesday, as it unveiled a new line of TV, radio and newspaper advertisements designed to highlight the value of U.S. refineries. The trade organization declined to say how much it will spend on the advertisements, which will air inside the Beltway and nationally, but they include the same “lady in black” that has dominated API’s long-running Energy Tomorrow campaign.

An initial television ad shows the black-suited woman in front of scurrying workers, a long stretch of pipeline and cars speeding along the highway, as she outlines what it takes “to make America run” including “lots of hard-working Americans creating the fuels for nearly 250 million vehicles” and “about 170,000 miles of secure pipelines many of us never see.”

Cindy Schild, API’s refining senior manager, said the advertising campaign is meant “to highlight the critical role of our refineries to Americans and policymakers,” as regulators mull new gasoline emissions standards and prepare to tell the industry how many gallons of biofuels they must blend into transportation fuels in 2013.

America’s refiners “compete in a global marketplace” against new, world-class facilities in Asia, Schild noted. “Common-sense policies are vital to ensuring a vital refining sector that will continue to invest in America’s future.”

A major priority for the industry’s top lobbying group is getting rid of the 8-year-old biofuels mandate, which forces refiners to blend steadily increasing amounts of ethanol and other alternatives into the nation’s transportation fuel supply. By 2022, the mandate will require 36 billion gallons, up from 13.2 billion gallons last year.

Under the mandate, refiners also are obligated to use cellulosic ethanol made from switchgrass and other non-edible plant materials, even though the product has never been mass produced.

At an event last week, API president Jack Gerard said the aspirational cellulosic ethanol requirement is the epitome of “bad public policy.”

“Here you have a situation where it not produced in commercial quantities, but the EPA has the authority to essentially tax the industry . . . because we don’t use a fuel that doesn’t exist,” Gerard said.

API has taken a hard line against the renewable fuel standard, and is insisting that the whole mandate should be tossed out — not just revised. Patrick Kelly, the group’s downstream refining manager, told reporters on Tuesday that even without a renewable fuel requirement, the nation’s transportation fuels generally would continue to contain about 10 percent ethanol.

Although the EPA has approved 15 percent blends for some recently produced cars and trucks, E15 is not readily available; most filling stations instead pump out a 10 percent ethanol blend. The 10 percent ethanol mixture effectively forms a “blend wall” for refiners seeking to comply with the RFS.

E10 “is an excellent product that will continue to be used in the United States,” even without the mandate, Kelly said.

But the  lobbying group is concerned that the fuel standards will force blends above 10 percent, Kelly said.  ”That’s the unworkable nature of the mandate,” Kelly said.

Bob Dinneen, president of the Renewable Fuels Association, argued that the RFS is “a proven success” that is “stimulating investment in next-generation ethanol.” He suggested the oil industry’s opposition is driven by competitive fear.

“The RFS is also driving the marketplace beyond ethanol’s use as an additive, which was a fundamental objective of the program,” Dinneen said. “E15 and E85 are available right here, right now and ‘Big Oil’ doesn’t like it.”

Dinneen insisted that biofuels must be part of “any national solution to energy independence and job creation.”

One option for lawmakers looking to change the standard  – but not scrap it completely — would be to mandate a 10 percent ethanol blend now. But API is opposed to that approach, Kelly said, because some consumers still prefer gasoline without ethanol for off-road recreation use, “and our companies still would like to be able to provide that fuel.”

Refiners and regulators are still in talks over how to deal with fraud in the nation’s system for tracking the use of renewable fuel. More than 140 million fake renewable identification numbers theoretically assigned to batches of biodiesel have been sold, with refiners who bought the scam credits being forced to pay fines and replace them with valid ones.

Later this month, the Environmental Protection Agency is expected to unveil a final rule setting the renewable fuel targets for 2013. Until then, Kelly said, refiners are “flying blind.”