In a letter to EPA Administrator Scott Pruitt on Friday, Texas Gov. Greg Abbott (R) asked the agency to waive Renewable Fuel Standard (RFS) Renewable Volume Obligations (RVOs) for his state to no more than 9.7% for the conventional biofuel requirement, suggesting the RFS threatens to severely harm the state’s economy.
Abbott said as Texas leads the nation in both crude oil production and refining, the strength and resiliency of the industry is “threatened by a restrictive federal mandate.” The letter stated that Renewable Identification Numbers (RINs) prices which reached over $1.40 are “escalating and unjustified” and creating severe economic hardship for refiners, small retailers, consumers, skilled labor and others.
Abbott stated that of Texas’ 29 refineries, it is estimated that 22 are held by companies in a short position – meaning they are hurt directly by high RINs prices. “Small retailers, representing approximately 75 percent of the retail gasoline market, are harmed by high RINs prices, too,” the letter noted.
In response, Renewable Fuels Association President and CEO Bob Dinneen argued that Abbott’s waiver request doesn’t come anywhere close to meeting the very high threshold required by the statute for proving “severe harm.”
“The truth is, the RFS is helping—not harming—the Texas economy by offering greater consumer choice, lower cost fuels, and thousands of jobs in ethanol production and agriculture. While Texas is always labeled as a big oil and gas state, the RFS has supported a burgeoning renewable fuels industry in the Lone Star state as well. Not only is the state home to four large ethanol plants, it is also home to 199 stations offering E85 and other flex fuels, dozens of stations selling E15, and one of the largest populations of flex fuel vehicles in the nation. Gov. Abbott’s waiver request ignores this critical Texas industry and would undermine the significant economic benefits it offers each and every day.”
Dinneen added, “In any case, EPA’s threshold for action specifically notes that an impact on any particular industry would not trigger a waiver. Rather, the agency will look at the impact on the economy as a whole and with ethanol today being less expensive than gasoline, and providing consumers significant savings at the pump, that is a threshold that simply is not met today.”
Dinneen also noted the waiver request also overlooks a number of important realities regarding RIN credits and the gasoline market.
“Just two weeks ago, an analysis from Wells Fargo corroborated studies from Harvard University, MIT, the University of Michigan, Iowa State University, and other institutions showing that merchant refiners recoup their RIN costs through higher refining margins. When these facts are properly taken into consideration, it is clear that EPA has no choice but to deny Gov. Abbott’s request for a waiver of the RFS requirements,” Dinneen said.