Sen. Ted Cruz is considering a cap on the price of ethanol credits as part of a deal he wants to work out with renewable fuel and corn ethanol proponents on Capitol Hill.
But the idea has not made its way to the office of the Senate’s chief ethanol backer, Sen. Chuck Grassley, R-Iowa, who will have a large say on how far the proposal will go.
“We haven’t received any proposal from Sen. Cruz,” Grassley spokesman Michael Zona said Friday.
Reuters reported Friday that Cruz has a proposal for the Environmental Protection Agency to sell “fixed price waiver credits” at 10 cents per credit, which would be used by oil refiners to satisfy all requirements to blend biofuels under the EPA’s Renewable Fuel Standard and ethanol mandate.
The RFS requires refiners to blend ethanol and other biofuels in the nation’s diesel and gasoline supply. If they cannot blend the fuel, they can buy Renewable Identification Number credits, or RINs, to comply with the standard.
EPA sells waiver credits for only one type of renewable fuel under the RFS’ cellulosic biofuel category. It is not clear if the agency could change that program to sell other credits without congressional action.
The refining industry mostly wants to change having to buy corn ethanol RINs. Corn ethanol makes up the largest part of the RFS requirements. The refiners argue that buying ethanol RINs is driving up the cost of doing business, which could lead to them shedding jobs and closing facilities.
Cruz also wants to create a working group comprised of administration officials, lawmakers, and stakeholders to devise a longer-term solution.
Cruz and Grassley staffers met at the White House this week to hash out the terms over which they could potentially develop legislation to reach a deal
Grassley’s staff told the Texas Republican’s aides after the meeting to prepare and circulate legislative ideas that the ethanol camp can look at and consider.
“The next step is for Sen. Cruz to circulate specific proposals for consideration,” Zona said after the meeting.
“The integrity of the RFS is Sen. Grassley’s priority and there was an understanding expressed broadly in the meeting that any outcome can’t undermine the integrity of the RFS,” the spokesman added.
The biofuel industry expressed its opposition to Cruz’s proposed cap on RIN prices Friday, saying the best way to lower biofuel credits is to blend more ethanol into the fuel supply.
The ethanol industry and dozens of other biofuel groups sent a letter to President Trump on Friday explaining that the oil refiners can bring down RIN costs by simply blending higher amounts of the fuel, which is how the RFS is designed.
The renewable fuel industry wants legislation that would direct the EPA to waive Reid Vapor Pressure, or RVP, which is a fuel volatility standard for 15-percent ethanol gasoline blends. The higher ethanol fuel cannot be blended during the summer because of the RVP restrictions.
Most gasoline sold in the U.S. is a 10-percent gasoline blend. The increase in the amount of ethanol blended in the fuel supply would help reduce the cost pressures that refiners are seeking relief from, the biofuel groups argue.
“The ready solution to Senator Cruz’s stated concerns is to blend more ethanol and send clear regulatory signals about the future growth of biofuels under the RFS,” said Emily Skor, president of the pro-ethanol group Growth Energy. “RVP relief would immediately add another three months’ worth of E15 sales to the market. That’s how RFS is meant to work.”
Others lashed out at Cruz on Friday for not taking seriously Trump’s stated support for the RFS and ethanol.
“Ted Cruz and his backers don’t seem to be taking the White House seriously,” said Brooke Coleman, executive director of the Advanced Biofuels Business Council. “President Trump vowed to protect rural America.”
“No one is going to raise costs on consumers, jeopardize our energy security, and threaten jobs across the heartland based on misinformation about how the RFS works,” Coleman said. “Instead of refinery handouts, we should cut the red tape and let customers decide whether to buy E15 all year long.”
