Branstad: Changes to RFS Point of Obligation Only Rumors

March 8, 2017 03:41 PM

There’s been plenty of confusion around potential changes to the Renewable Fuels Standard (RFS) and changes to the point of obligation.

Gov. Terry Branstad (R-Ia.) is throwing a wrench into the recent debates. He told the Des Moines Register these changes are only rumors and they won’t happen.

“I know the rumors, and I can tell you who was involved and I can tell you they are not true,” he said.

If they are true, one of the foremost ethanol experts in the country says it would create a big headache for fuel distributors.

“If the point of obligation is changed further down the system to the blenders or terminals, there would be about 1,000 of them instead of 150,” said Wally Tyner, agricultural economist at Purdue University. “It would be much harder to enforce, much harder to achieve compliance. Some have argued it would be the end of the RFS because you couldn’t enforce it.”

Tyner says no matter what happens with RFS, he thinks corn ethanol is here to stay since petroleum refiners have found the benefit of adding corn ethanol to the octane levels in gasoline. If anything, he says, biodiesel and cellulosic ethanol could be in jeopardy.

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Spell Check

Ramon Benavides
Vero Beach , FL
3/9/2017 10:01 AM

  I am a supporter of renewables for 10 years and this is a very confusing issue. As a regulatory compliance consultant to this industry, there are many misunderstandings of this issue. My white paper, "Understanding the Points of Obligation", outlines the issues and provides the reader a better understanding that provides empirical information about the numbers. In short, the EPA is using facility numbers versus company numbers. Secondly, a change will alleviate reporting for 5600 facilities and reduce the enforcement requirements for the program based upon data from US EPA, Treasury and State Fuel Tax Divisions. Thirdly, the paper graphically outlines the complexity of the program and how it is widely misunderstood and how the change is easier for EPA to enforce. I agree there is speculation in the market and the releases of information are affecting the market. My additional white paper on RIN trading illustrates how events such as news releases impact RINs prices. I believe the recent event was a market head fake to reduce compliance costs for certain groups that will have to buy and retire RINs 30 March 2017. Since November of last year ethanol RIN prices have lost 70% value meaning an OP saved up to 70% on compliance costs for 2016 RVO, if they leveraged timing.


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