BRAG® Biofuels Industry Outlook For 2017
Throughout his campaign for President, Trump repeatedly pledged his support for biofuels and the federal Renewable Fuel Standard (RFS). Indeed, it is this support that helped Trump win in key Midwestern battleground states, including Iowa. Despite this, Trump has nominated fossil fuel supporters and anti-biofuels advocates to three key Cabinet positions. His nominee for U.S. Secretary of State, Rex Tillerson, is the former CEO of Exxon Corporation. Exxon and other RFS-obligated parties have been actively fighting for the repeal of the RFS since 2012. The nominee to head the U.S. Department of Energy (DOE), former Republican Texas Governor Rick Perry, has close ties with the fossil fuel sector, did not actively support the RFS during his two Presidential campaigns, and has in the past called for the elimination of the DOE, as well as mandates that “skew” the energy marketplace. In addition, Governor Perry petitioned the U.S. Environmental Protection Agency (EPA) in 2008 for a 50 percent waiver of the RFS requirements, which EPA denied. He has also taken positions against issue-specific tax incentives and any specific incentives for new energy development. Finally, Scott Pruitt is the nominee to lead EPA. In his current role as the Republican Oklahoma Attorney General, Pruitt has ties to fossil fuel groups and has sued EPA 19 times — the very agency he is nominated to run — over the RFS and the Clean Power Plan, among other major regulations under the purview of EPA.
On Wednesday, January 18, the U.S. Senate Committee on Environment and Public Works (EPW) held its hearing to consider the nomination of Pruitt to become the Administrator of EPA. Pruitt indicated in a meeting earlier this month and during his nomination hearing before the EPW Committee that, as EPA Administrator, he would administer the RFS law as Congress intended.
On January 5, several U.S. Senators from Midwestern states met with Pruitt to discuss their concerns over his criticism of the RFS, among other policies. Reportedly, these Senators emerged from the meeting reassured that Pruitt would follow the RFS law. The RFS law, however, provides the EPA Administrator discretion in his implementation of the law. For instance, one potential change to the regulations implementing the RFS currently being considered and on which public comment is being solicited is whether to change the point of obligation under the RFS, which would shift the obligated parties downstream to fuel marketers, including gas stations. Such regulatory changes to the implementation of the RFS law could have detrimental effects on its intended purpose to increase the volumes of biofuels that are blended and used in our nation’s fuel supply.
During Pruitt’s nomination hearing, he reiterated his commitment to implementing the RFS law as Congress intended, despite his past statements that the RFS law is “flawed” and “unworkable.” Pruitt explained that he believes that the EPA Administrator’s waiver authority under the RFS should be used “judiciously.” He suggested, however, that implementation of the RFS could be improved.
Generally, biofuels advocates have argued that there is no need for legislation to change — and certainly not to repeal — the RFS. While there still exists ardent RFS support in both Houses of Congress, biofuels advocates will likely face greater challenges to their efforts to prevent the passage of legislation that would alter or repeal the RFS, or to alter or repeal other existing biofuels incentives. For instance, at a recent hearing, Senator John McCain (R-AZ) voiced his ongoing disapproval of the military’s focus on developing and using alternative fuels since they have been more expensive than fossil fuels.