The U.S. Government Accountability Office today released a report on the U.S. Environmental Protection Agency’s decision-making when it comes to small refinery exemptions from the Renewable Fuel Standard. The report had been requested more than three years ago by renewable fuel supporters in Congress, and so much has changed in the program that the report is not only flawed, but also obsolete upon arrival. The following is a response from Renewable Fuels Association President and CEO Geoff Cooper.
“You simply can’t make this stuff up. In the summer of 2019, a bipartisan group of renewable fuel supporters in both the House and Senate asked the GAO to investigate the gross mismanagement of the small refinery exemption program by former EPA Administrators Scott Pruitt and Andy Wheeler. Now, more than three years later—and less than one week before the mid-term elections—GAO puts out a shoddy report that is friendly to oil refiners and purports to answer questions no one ever asked.
“GAO’s ‘economic analysis’ can only be described as a creative and obscure acrobatic routine. And even after performing these high-flying gymnastics, GAO can only suggest that the cost of RFS compliance for small refiners might be 0.5%—that’s half of 1 percent—higher than what larger refiners experience. In other words, GAO says small refiners—who are raking in record profits—can only pass on 99.5% of their RFS compliance costs. Meanwhile, refiners are plastering TV ads all over the DC market claiming that 100% of their RFS compliance costs are somehow passed all the way to consumers, meaning they bear no RFS compliance cost at all—a message that undermines GAO’s latest questionable findings.
“The bottom line is there is no such thing as ‘disproportionate economic hardship’ under the RFS. All refiners—large or small, merchant or integrated—face the same compliance obligations and they all pass their RIN costs on to fuel blenders at the terminal. Period. There is a mountain of evidence confirming this fact, and GAO’s new report will just be thrown on the growing scrap heap of refiner disinformation meant to undermine the success of the RFS.”
Cooper said the only thing GAO got right in its report was the fact that SREs reduce demand for renewable fuel, causing harm to ethanol producers. According to GAO: “Because small refinery exemptions have been granted after the annual requirements were set, they have likely reduced blending. According to experts and a representative of a fuel blender, exemptions have reduced the price of RINs, giving less incentive to blend renewable fuel.”
“We have been saying this for years, and refiners have been claiming that SREs somehow had no impact on renewable fuel blending,” Cooper concluded. “While the GAO report’s analysis on RIN passthrough is fundamentally flawed, at least they recognize that SREs do in fact reduce physical demand for ethanol and other renewable fuels.”