RFS Standstill

Dinneen: Oil, Ethanol Meetings Not Scheduled Yet, Likely Not Constructive

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
Connect with Todd:
The head of the nation's largest ethanol interest group told DTN there are no meetings scheduled between oil and ethanol interests to talk about the Renewable Fuel Standard. (DTN file photo by Todd Neeley)

WASHINGTON (DTN) -- President Donald Trump's administration and some members of Congress want oil and ethanol interests to just get along and work out their differences on the Renewable Fuel Standard. But the leader of the nation's largest ethanol industry interest group told DTN in an exclusive interview on Thursday that, so far, no such meetings between the two sides have been scheduled and may not be scheduled.

Renewable Fuels Association President and CEO Bob Dinneen said he's not sure oil industry representatives know what they want.

"I'm not sure how constructive it could be, because the oil industry is not monolithic on how to address RFS issues," he said. "So, what problem are we really trying to solve? Whose problems are we trying to solve? And how many bites of the apple are they going to get?"

Earlier this week, Sen. Charles Grassley, R-Iowa, called on ethanol and oil interests to work out their differences on the RFS, as the nomination of Iowa Agriculture Secretary Bill Northey to a USDA undersecretary post continues to be held up by Sen. Ted Cruz, R-Texas. Cruz is using the hold as leverage in hope of forcing the ethanol industry's hand.

Cruz placed the hold until lawmakers from oil-producing states were granted a meeting with the president and others to discuss possible changes to the RFS. Cruz and others have proposed placing a 10-cent cap on the price of renewable identification numbers, or RINs, as a way to bring down RFS compliance costs for refiners.

Grassley said this week that the Senate "will have to proceed without the RFS."

RINs are generated when a qualified renewable fuel is either produced or imported. RINs then are bought within the refinery industry by companies that are not producing or buying enough renewable fuels to meet their blending obligations.

The Cruz proposal is for the U.S. Environmental Protection Agency to sell a 10-cent, fixed-price waiver credit that would qualify as a RIN and satisfy a petroleum blender's obligations. The proceeds from the 10-cent waiver sales would help pay for renewable-fuel blending infrastructure, tied to an existing program such as the Biofuel Infrastructure Partnership or a similar fund.

The senator also proposed the establishment of a working group, including administration officials, to find a long-term solution to the RIN issue.

Dinneen said if oil industry officials want to meet with ethanol interests, they need to decide where they stand on the RFS.

"You've got some refiners that think you can cap the price of RINs and that solves everything," he said. "You've got other refiners that say, no, you've got to move the point of obligation. You've got some oil companies that say this program is antithetical to everything that we do and it just needs to go away, so repeal it. You've got other oil companies, refiners, that say you know what we really want to do is provide an incentive for higher level blends, this notion of a D8 RIN.

"They're all over the map. So, I'm sorry, why don't you figure out what your bottom line is, figure out what you need to do, because the ethanol industry is completely united on support for the RFS, continuation of the RFS, increasing consumer access to higher level blends through the waiver credit. We all sing from the same hymnbook. And it's an ugly mob that we're supposed to sit down with, and figure out who's got the loudest voice?"

Dinneen said ethanol industry officials believe the RFS program is working and are hesitant to consider changes that would do harm.

"If it ain't broke, don't fix it," he said. "And this is not a broken program. I think there are lots of solutions in search of a problem.

"The reason the oil industry is not monolithic on this is because you have some refiners that made the investments in blending, that is meeting their obligations on ethanol today. Then you've got other refiners that have stuck its head in the sand, didn't recognize that the government was serious when it said you gotta invest in renewable fuels, and has done nothing since the act was passed on Dec. 17, 2007. So more than 10 years now, they've done nothing to try to make sure that they can meet the law."

Dinneen said any changes made to the RFS law would be "accommodating" those refiners who chose to "ignore the law" and didn't "make the investments that others made to accommodate a bipartisan, overwhelmingly supported, and publicly supported renewable fuels policy in this country."

Leaders in the agriculture and biofuels industries have been united in their opposition to the Cruz proposal to cap RIN prices.

The RIN cap proposal spurred major players in both biofuels and commodity crops industries to send a letter to the president detailing why the RIN market exists, how it is operated by EPA, and some of the problems EPA has in providing transparency on RIN trading.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN


Todd Neeley

Todd Neeley
Connect with Todd: