RFS Revamp Legislation Introduced

This week, House Energy and Commerce Committee members John Shimkus (R-IL) and Rep. Bill Flores (R-TX) introduced the “21st Century Transportation Fuels Act,” which aims to revamp the Renewable Fuel Standard (RFS) by moving towards a fuel performance standard to reduce emissions and preserve the liquid fuels industry. The bill is essentially identical to the draft legislation introduced last year which would nix the 15-billion-gallon corn ethanol mandate in 2022 and transition to a national octane standard. In other words, the legislation would swap out a government mandate for a performance standard that autos, refiners and petroleum marketers would need to meet. The legislation is highly unlikely to become law this Congress, but it could set the stage for an RFS revamp in the next Congress. Both Representatives Flores and Shimkus announced that they are not running for reelection in 2020.

The legislation aims to encourage the production of high compression engines (HCEs) warrantied up to E20 and refiners to produce higher octane fuels known as 95 research octane number (RON) that would be compatible with HCEs. 95 RON is similar to today’s premium fuel that would lower emissions and preserve the liquid fuels distribution network. Although PMAA is concerned that implementing a higher-octane fuel may be used as an excuse to mandate E15 or higher ethanol blends, moving towards a performance standard versus a government-imposed mandate may have its benefits by maintaining the liquid fuels marketplace. Given ethanol’s octane boost, E10 would likely be used to meet the 95 RON standard.

PMAA applauds Reps. Shimkus and Flores’ work on trying to find common ground between the corn, refining and marketing interests. While this legislation may be a mixed bag for petroleum marketers, keep in mind that current law puts the responsibility of the RFS in the hands of the EPA to set yearly RVOs following 2022. Therefore, this bill is the first step that serves as a blueprint for future legislation where all parties must give something up to preserve the liquid fuels industry. PMAA will continue to monitor the issue.

From PMAA