Tax Groups, Think Tanks Want RFS Waiver

Letter Cites Diversion of Hand Sanitizer Production as Reason for Request

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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A number of interest groups have asked President Donald Trump to waive the Renewable Fuel Standard in light of COVID-19. (DTN file photo by Jim Patrico)

OMAHA (DTN) -- Pressure is mounting on President Donald Trump to change the Renewable Fuel Standard in light of the economic downturn brought on by COVID-19. A number of tax, environmental and political think tanks sent a letter to Trump on Tuesday asking him to make changes to the law.

In recent weeks, governors in five states and the mayors of two cities in Ohio made similar requests, citing increased RFS costs imposed on the oil and gasoline sectors.

The ethanol industry, however, has idled more than 70 plants in response to cratering demand for gasoline.

"Our organizations have consistently pointed out the clear shortcomings of the RFS, a market-distorting boondoggle that mandates consumer demand for politically connected biofuel companies at the expense of hard-working Americans and the environment," the groups said in a letter to Trump.

"Inaccurate projections from 2005 and 2007, an inconsistent annual standard-setting and waiver process, and Congressional inaction, punctuated by agency infighting, underscores the need for repeal of the program," the groups said.

The letter was signed by 24 groups, including the Tea Party Patriots, Americans for Prosperity, American Energy Alliance, Citizens Against Government Waste, Heartland Institute, among others.

COVID-19 and the government's response to it "demonstrates the fundamental problem with the RFS, as this mandate exceeds the amount of biofuels that consumers want or need and will result in unnecessary economic harm," the letter said.

"The pandemic demonstrates why it is so problematic to rely on short- or long-term biofuel projections by Congress or regulators and to require annual volumetric standards in a dynamic marketplace with ever-changing supplies and consumer demand."

The groups asked Trump to revisit the recently approved 2020 RFS volumes and "direct the U.S. Environmental Protection Agency to build upon recent waivers to ensure the availability of gasoline by waiving these biofuel requirements for the remainder of 2020."

The groups said there were at least four reasons for waiving volumes, including that RFS volumes will "dramatically exceed consumer demand for biofuels, resulting in greater compliance costs."

In addition, the groups said 2020 volumes are based on gasoline demand assumptions that "are clearly inaccurate."

"As a 'result of the disruptions to economic and business activity because of COVID-19 and the strict containment measures that have dramatically reduced all forms of travel,' government and industry forecast dramatic reductions in gasoline demand for the bulk of 2020," they said in the letter.

ETHANOL REACTION

Geoff Cooper, president and CEO of the Renewable Fuels Association, said the RFS already has built-in flexibility to adjust to market conditions.

"These groups should be ashamed of themselves for trying to capitalize on a global health pandemic to score cheap political points and advance their long-standing anti-farmer, anti-biofuel agenda," he said.

"Out of one side of their mouths they claim to want a 'free market,' and out the other side they lobby for special favors, subsidies and handouts for fossil fuels."

Cooper said waiving the RFS "won't help anyone as long as there's a pandemic and oil price war going on."

Emily Skor, CEO of Growth Energy, said the oil and gasoline sectors already are being aided by the Trump administration.

"Policymakers are already promising billions in aid to the oil industry, while rural communities are being left behind, as biofuel plants continue to close their doors across the heartland," she said.

"DIVERTING RESOURCES"

In addition, the letter said, "affordable mobility is more important than ever in a time of social distancing, and increased prices or lack of availability of transportation fuel disproportionately impact low- and fixed-income individuals."

The groups cite information from AAA that "raised concerns that ethanol blends above 10% can damage vehicles and confuse consumers, gas prices in the continental United States continue to be very low but vary widely across different states.

In addition, the groups said failing to waive RFS volumes could "divert critical resources from needed sanitizer production" to an "irrational" RFS requirement.

"It is not reasonable to expect RFS levels to be met this year," the groups said.

"The current economic and health circumstances would make RFS compliance an additional burden to the American economy and slow the recovery once America is open for business."

Read the entire letter here: https://americansforprosperity.org/….

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

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Todd Neeley