Refiners lobbying lawmakers to repeal renewable fuel law

Refining industry executives and restaurant owners are set to meet with lawmakers on Wednesday in a bid to convince them to scrap an eight-year-old renewable fuel mandate, despite signs Congress has low appetite for a complete repeal.

Representatives from eight refiners are set to lobby legislators on the issue in a coordinated campaign organized by the American Petroleum Institute. They will be talking to members of the congressional energy committees as well as House and Senate leadership. At the same time, more than two dozen restaurant executives and fast food franchisees will be blanketing Capitol Hill as part of a separate lobbying effort organized by the National Council of Chain Restaurants.

Although the American Petroleum Institute did not name specific participating companies, it said the representatives involved in the D.C. fly in include executives from big and small refiners around the U.S.

“We’re meeting with members of Congress to help them understand the severe economic consequences that could occur unless they take action,” said Bob Greco, downstream group director for the American Petroleum Institute.

Stephen Schatz, a spokesman for the chain restaurants group, said repealing the renewable fuel standard is a top priority because the mandate “artificially inflates commodities prices throughout the supply chain – from the rancher to the restaurant – impacting local businesses, job creation and ultimately consumers and diners.”

The anti-RFS lobbying push comes a week after about 150 ethanol executives made their own plea on the biofuel mandate, imploring lawmakers and federal regulators to preserve the policy.

First created in 2005 and expanded two years later, the renewable fuel standard requires refiners to blend steadily escalating amounts of biofuel into the nation’s gasoline supply. Most of the mandate has so far been satisfied by corn-based ethanol made in the United States or sugarcane supplies from Brazil.

But refiners say they have hit a “blend wall,” a point where adding more ethanol to gasoline to satisfy the requirements would result in blends beyond a 10 percent limit approved for use in all vehicles. Alternatives to corn- or sugar-based ethanol — including cellulosic biofuels made from non-edible materials — have been minimally produced in the United States, at least temporarily blocking another potentially big route to compliance.

Greco insisted Tuesday that the renewable fuel standard is “broken beyond repair.”

“The mandated ethanol volumes are completely out of touch with today’s fuel market reality,” Greco said.

In meetings with policymakers, the trade group is wielding a new four-page fact sheet that uses charts on gasoline consumption, renewable fuel demand and domestic crude production to portray what API calls a “reality gap” between government policy on biofuels and real market conditions.

Members of the House Energy and Commerce Committee have been working to develop broad principles for overhauling the renewable fuel standard. Several key panel members have said a full repeal is not an option.

Rep. John Shimkus, R-Ill., on Tuesday also suggested that proposals to freeze renewable quotas at current levels are a non-starter, because it would send “terrible market signals” and jeopardize billions of dollars in investments in advanced biofuels.

“You have capital investment out there,” Shimkus said at Platts Energy Podium. “People are working hard based on a promise from the federal government and you just can’t walk away from that. You just can’t say ‘Huh, you spent 2 billion dollars, you’re out of luck and you shouldn’t trust the government.’”

Shimkus said that the Environmental Protection Agency already took some pressure off Congress to act when it finalized 2013 renewable fuel quotas in August and promised to pare the requirements next year in response to concerns.

If proposed 2014 numbers come out soon and are realistic, Shimkus said, that could negate the need for Congress to move. In that case, there may not even be a legislative response, he said.

If the EPA “were more realistic with their numbers, that would be very, very helpful,” Shimkus said.

Biofuels boosters have argued that the EPA’s 2013 quotas and the promise to be pragmatic in 2014 show the agency already has all the flexibility it needs under the 2007 law that created the current iteration of the renewable fuel standard.

Tom Buis, CEO of Growth Energy, said the API was making “an attempt to roll back the most successful energy policy our nation has ever enacted and prevent consumers from choice and savings at the pump.”

But Greco said the EPA’s renewable fuel quota-setting — done on an annual basis — doesn’t provide the kind of market certainty that the oil industry needs. “It’s nothing but a Band-Aid,” Greco said.