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12/02/2021 07:47 PM
Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20210&cosponId=36294
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House of Representatives
Session of 2021 - 2022 Regular Session

MEMORANDUM

Posted: October 4, 2021 03:58 PM
From: Representative Martina A. White and Rep. Joshua D. Kail
To: All House members
Subject: Renewable Fuel Standards
 
In the near future we plan to introduce a resolution urging the United States Environmental Protection Agency (EPA) to implement meaningful reforms to the Renewable Fuel Standard (RFS).  The RFS—established by the Energy Policy Act of 2005 and expanded in 2007 by the Energy Independence and Security Act – began with 4 billion gallons of renewable fuel in 2006 and is scheduled to ascend to 36 billion gallons in 2022. The EPA has statutory authority to determine the volume amounts after 2022.
The RFS is currently not functioning as Congress intended, and independent refiners, including those in our region are seeking reasonable solutions that will ensure the continued use of domestic biofuels without putting refiners at risk of closing.  This is especially important because our regional refiners are poised to play a significant role in the production of the greener fuels of tomorrow.
  • Reduced demand for oil and gas due to Covid, along with actions taken in the previous administration, have resulted in enormous volatility in the RFS markets. This has made it extremely difficult for independent merchant refiners to meet their RFS obligations.
     
  • Of particular concern is the implementation of the RFS compliance trading system used by EPA, the Renewable Identification Number (RIN) market, which has fluctuated wildly as a result of various market forces. The market prices for a biodiesel RINs or a corn ethanol RINs are surpassing all-time high levels. In May of 2020, the price of RINs was 36 cents, and in June of 2021, it reached an all-time high of $1.98.In early 2013, an ethanol RIN cost less than 5 cents.
     
  • At these prices, the cost for our regions refineries to comply with the RFS eclipses their total costs of salaries, benefits, and capital improvements combined.

     
  • Allowing RIN prices to spike to these levels makes it extraordinarily challenging for refiners to engage in midterm economic planning and budgeting—let alone to attract capital to undertake long-term major investments that create new, high-quality jobs.
     
  • The request is for the EPA is twofold: (1) first, to immediately move to grant the petitions of Governor Wolf and the governors of LA, TX, UT, OK WY and NM and waive RFS requirements to the extent necessary to quickly bring RIN prices back to reasonable levels; and (2) act quickly to implement permanent reforms which provide cost containment and stability for refiners, while allowing for blending of renewable fuels as originally envisioned by Congress.

     
  • Inaction by the EPA would have a ripple effect in the state. According to a study performed by the Commonwealth of Pennsylvania, each refining job in southeastern Pennsylvania has a large multiplier effect on the regional and statewide economy, supporting an estimated 18.3 jobs in southeastern Pennsylvania, and 22 jobs statewide.
     
  • Inaction could also create a national security threat: If US refineries close, PA and the country would be more reliant on foreign petroleum and cybersecurity threats on pipelines.Ironically this increased dependence on foreign energy sources is EXACTLY what the RFS was intended to help prevent.
     
  • America’s independent refineries want to be part of the green energy future, and they are well-positioned to make historic contributions towards this effort.  But they will never have this opportunity without RFS reform, because the compliance costs are too high for them to make the necessary capital investments to convert to greener technologies. 
 
Please join us in supporting this important resolution.
 



Introduced as HR148