February 22, 2017
New Economic Analysis Exposes Problems with Changing the Renewable Fuel Standard Point of Obligation
Author: Growth Energy
WASHINGTON, DC — Growth Energy today released an expert economic analysis that identifies numerous problems associated with changing the Renewable Fuel Standard (RFS) point of obligation. Growth Energy strongly supports EPA’s proposed denial to move the point of obligation.
“Changing the point of obligation would have a disastrous impact on the industry, retailers, and consumers,” Growth Energy CEO Emily Skor said.
“Shifting the financial and administrative burden to retailers and fuel distributors would result in a logistical and regulatory nightmare. Hundreds – if not thousands – of new parties would suddenly be required to demonstrate compliance. This would require new rules, new staff, new infrastructure, and years of recalibrating a program that already works, not to mention potential delays with annual renewable volume obligations (RVO)s. Changing the point of obligation would dramatically expand the number of new obligated parties including fuel marketers, convenience stores, truck stops, trucking companies, railroads, and even consumer service companies like FedEx and UPS.”
The analysis, conducted by Edgeworth Economics, is part of the association’s detailed comments, to the U.S. Environmental Protection Agency (EPA), which were filed today. Growth Energy’s comments and the analysis detail how a shift in point of obligation would be detrimental to growing the renewable fuels marketplace and would ultimately undermine an energy policy that has cut oil imports and reduced transportation-related emissions. A change to the point of obligation would limit consumer fueling options and would increase costs for consumers by stifling competition among market participants.
The analysis’ key findings include the following:
- Shifting the point of obligation would have no impact on the incentives to invest in biofuel infrastructure or increase blending of renewable fuels.
- Renewable Identification Number (RIN) values represent neither windfalls for blenders nor out-of-pocket costs for refiners.
- RIN markets are, for the most part, operating efficiently and competitively; moreover, a change in the point of obligation would have no beneficial impact on those conditions.
- Changing the point of obligation would have no impact on fraud in the RIN markets.
- The petitioners’ proposal would result in an increase in the number of obligated parties and an increase in the overall administrative burden of the RFS.
“The RFS point of obligation must be preserved to ensure that fuel retailers continue to have the incentive to make the investments necessary to deliver renewable fuels that provide consumers with better, cleaner, and more affordable choices at the pump,” Skor added.
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