WASHINGTON – Sen. Chuck Grassley of Iowa released the following internal memorandum produced by his energy policy staff who analyzed recent claims made by opponents of the Renewable Fuel Standard (RFS), including Philadelphia Energy Solutions (PES), which attributed its recent bankruptcy filing in part to the RFS. The analysis finds that the biofuels blending requirement and the cost of Renewable Identification Number credits (RINs), a compliance mechanism designed for flexibility, have little to do with the success of refineries and were not significant factors in the PES bankruptcy. The Grassley analysis reached similar conclusions as those of multiple recent studies, including multiple by the University of Pennsylvania’s Kleinman Center for Energy Policy (1, 2, 3, 4). The Grassley staff analysis can be found here.
“I’m concerned any time an American’s job could be lost,” Grassley said. “After I heard that the Renewable Fuel Standard was being blamed for the financial troubles of some refineries, I wanted to know more. So I asked my staff to get to the bottom of the situation. After reviewing the facts, I’m confident that the Renewable Fuel Standard isn’t harming refineries, that other factors are at work, and that the RFS law is working as Congress intended. Once these facts are known, there ought to be an end to the misleading rhetoric blaming the RFS. I’ve always said that I’m for an all-of-the-above national energy strategy. Biofuels are responsible for thousands of jobs across the country. There’s no reason biofuels and other renewables can’t exist alongside conventional fuels. I’m thankful President Trump continues to support biofuels and rural America. The President should be applauded for his ongoing commitment to the RFS, which makes our air cleaner, energy cheaper and country stronger with more domestic energy production.”
The Grassley staff analysis found that, “The publicly available evidence points to the fact that PES finds itself in financial difficulty due primarily to changes in its available feedstocks and other management decisions. It does face a problem of having to acquire RINs to meet the looming RFS compliance deadline, but that is due in large measure to its reported decision last fall to sell off the RINs it had acquired, presumably in hopes of being able to buy them back at lower cost before the compliance deadline. Moreover, if PES had taken the sensible approach of other merchant refiners and invested in ethanol blending infrastructure or partnered with a blender, it appears it would have no need to purchase RINs at all.”
Grassley has said that it’s worth exploring ways to lower RIN prices without undermining the integrity of the RFS. Grassley has suggested making E15 available year-round and that EPA could do more to provide transparency to the RIN market.