(April 8, 2013) WASHINGTON — The Advanced Ethanol Council (AEC) reacted to the U.S. House of Representatives Energy and Commerce Committee’s plans to review the Renewable Fuel Standard (RFS). In a letter sent to Representatives Henry Waxman and Fred Upton, who chairs the committee, AEC Executive Director Brooke Coleman defended the RFS by outlining its necessity in the marketplace and as a solution for the ‘blend wall’.

“If you investigate the history of ethanol use in the United States, it becomes evident that the U.S. liquid fuels industry is not price driven, open or competitive,” states Coleman. “…it is important to emphasize that one of the primary problems with a non-competitive marketplace is its failure to properly reward innovation…. This is one of the primary reasons why the United States remains largely dependent on petroleum to meet consumer demand for liquid fuels. It is also the overarching reason why the RFS is necessary. The RFS provides innovators with a predictable (and flexible) expectation for demand in a marketplace that does not properly reward innovation.

“While the consumer expense of remaining dependent on oil is immense, the solutions to the blend wall are not. For example, there would be no blend wall if the majority of vehicles in the United States were flex-fuel vehicles (FFVs),” continues Coleman. “The most efficient way to deploy FFVs is to require them, as proposed by various Open Fuel Standard (OFS) proposals. Requiring FFVs would cost automakers very little – especially given that about 50% of new vehicles are already FFVs – but would have far reaching positive effects on the consumer marketplace (e.g. increased competition, consumer choice, cheaper fuel, low carbon fuels, etc.).”

Coleman goes on to answer other questions asked in the Congressional white paper, including questions on the benefits of E15, E85 as a viable solution to the blend wall, how environmental standards for cars might change implementation of the RFS, and if the blend wall has any impact on gas prices.

“…some members of the oil industry have suggested that the blend wall has led to an increase in the price of Renewable Identification Numbers (RINs), which in turn increases gas prices. This argument is extraordinarily divorced from the realities of how the RFS works,” says Coleman. “While it is true that RIN prices (for grain ethanol) have increased over the last 60 days, it is the obligated parties (i.e. oil companies) that are selling and trading RINs amongst themselves. In other words, oil companies get the RIN for free when they acquire the gallon of renewable fuel…. it is categorically absurd to claim that this is an extra cost on the oil industry.”

Read Coleman’s statements in full.