Skip to main content

tv   Hearing on the EP As Renewable Fuel Standard Program  CSPAN  April 5, 2022 2:15pm-4:19pm EDT

2:15 pm
more, including cox. >> cox is committed to providing eligible families access to affordable internet through the connect to compete program, bridging the digital divide one connected and engaged student at a time. cox, bringing us closer. >> cox supports c-span as a public service, along with these other television providers, giving you a front row seat to democracy. >> with increased gas prices, the house energy and commerce committee hears testimony from six oil company executives about their business practices and the fossil fuel industries role, watch on c-span 3, online at or c-span now free video app. representatives from the clean energy sector and petroleum industry talked about
2:16 pm
implementation of the epa's renewable fuel standard program, this is about two hours.
2:17 pm
>> pleased to call this hearing to order, today we'll examine the environmental protection agency's renewable fuel standard program, includes management and implementation challenges and greater deployment of more sustainable fuels. my staff tells me that our committee has not held oversight hearing on this topic since, what, 2016. going on six years, probably time. it would help and form our discussion, fortunate to have an expert panel of witnesses who are joining us today and we want to thank all of you for participating in this meeting, discussion. winston churchill's credited with saying a lot of things, one of my favorite quotes is, the further back we look, the further forward we see. and so we will take a moment, if you will to understand the history of this program and how we got to where we are today.
2:18 pm
in early 2000s, our nation's energy future didn't look all that promising. americans were consuming more and more gasoline and diesel fuel, were incredibly relying on imported oil to fuel this growth, and that alliance was increasing. as a result, global oil prices on the rise without any indication of slowing down and consumers were paying more at the pump every year. at the time, bipartisan group in congress took several steps to improve our nation's energy future and i would say with the leadership of president at the time, george w. bush, among those steps, we created and expanded the renewable fuel standard under the clean air act. our goals included providing new economic opportunity for farmers, while also lowering our dependence on foreign oil and reducing green house gas emissions from the fuel we burn in cars. since the implementation of the
2:19 pm
program, we've come a long way toward achieving goals, economic growth and agriculture community expanded and fuels become significantly cleaner than they were two decades ago. in fact, the community fuel standard represents economic and energy opportunities for people in delaware and every other state to seize. like many of our colleagues on this committee, still support the goals of the renewable fuel standard, having said that, there have been a number of challenges when it comes to the implementation of the program as we know. for example, the amount of advanced renewable fuels used today in this country is far less than 36 billion gallons that congress and president mandated in 2007 to be used in 2022, partly do you to unforeseen market challenges and delays from epa to allow new fuels to enter the market place, but make no mistake, advanced
2:20 pm
renewable fuels are being introduced with the potential to replace, gasoline, diesel and jet fuels on a gallon per gallon basis on today's combustion engines with no loss of performance many of these advanced fuels already approved for use and state renewable fuel programs in states like oregon, however epa has been slow to make decisions on new advanced biofuel applications and usage. at the same time, clean air act, some renewable fuels that state programs, from qualifying as renewable fuel under the federal program. we must find better ways to allow new advanced renewable fuels to qualify for renewable fuel standard and doing so would be good for our environment, would help refiners meet their obligations and further support a growing domestic biofuel industry. another challenge in
2:21 pm
implementing renewable fuel standard is the volatility. years of mismanagement under the previous administration coupled with the unexpected changes in fuel supply caused with the pandemic have collectively wreaked havoc on the programs compliance market known as the rin market, r.i.n. market. what is the rin market? epa tracks compliance with the renewable fuel standard using tradeable credits referred to as a renewable identification number or rins. finder and see importers can generate rins either by blending biofuels into fuel or purchasing rins from another party from what is known as the rin market. the huge price range in rin costs from 30 cents to almost $2 per gallon of renewable fuel in less than two years have created
2:22 pm
financial uncertainty for just about everybody, especially those who required to comply with renewable fuels standard. that, in turn, made it extremely difficult for obligated parties to make forward-thinking investments in cleaner fuels. i'm going to sneeze -- maybe -- maybe not. all right. excuse me, we must reduce liability and compliance costs for this program to be successful. to improve federal policies, often times look at what's happening in our states, democracy, and see if we can replicate some of them many states like california, oregon, implemented carbon fuel standards and these standards advanced cleaner fuel usage, kept consumer compliance cost
2:23 pm
low all while fostering local clean fuel investments and job creation. as we will hear today, these state programs have fuel flexibilities long-term predictability and cost containment provisions not contained in the original fuel standard and see maybe should be. one of the strongest supporters of electric vehicles in the senate, it's important to know we are not yet a post fubl world, and most maintain the fuels that power our lives while ensuring they are as efficient as possible to meet climate goals. look forward to hearing from witnesses today, first, senator capito, after a very brief stay, happy to have you back and looking great. recognized for opening statement. >> thank you, chairman, nice to be back in the nation's capitol so i appreciate that. i want to thank you for calling
2:24 pm
today's hearing and also want to thank our witnesses for joining us hear today. the renewable fuel standard as chairman defined it known as rfs is an important topic our committee, but we haven't had that hearing since 2016 so i think the long gap between hearing speaks to the intricacies of the program but the potential faultlines do not always align between one party or another, for my part, a few issues i'd like to cover during the hearing today, small refinery exemptions is one, changes to the program coming in 2022, and the need for accountability for epa's office of air, including the need for a nominee to head it. i'd like to highlight my concern about the two actions that the epa recently announced. first, in december, the agency proposed an all-time high renewable volume obligation for
2:25 pm
2022 that does not really reflect, i don't think, market realities and i'll be interested to hear what our panel has to say about that. i'm concerned this volume obligation is going to raise costs at a time where gasoline is at, is high, in and of itself, impacting american consumers and economy. second, also in december, epa announced a proposal to deny all pending small refinery exempt exemptions, that reduce hardship, imposed by the rfs program, this runs counter to progressional intent by epa act, the proposed action will negatively impact ergon a small refinery located in northern west virginia, ergon already won two court cases in the north circuit finding epa acted in arbitrary and caprecious manner
2:26 pm
in denying its small refinery petition, but that's just one of small refineries around the country with petition pending on the epa, this drastic step to propose blanket denial on a refinery position is especially puzzling as we see increasing gasoline prices and several small refinery closures around the nation eliminating good paying jobs in some of our rural communities as well. ultimately, this proposal will only lead to more litigation and increased uncertainty with american consumers bearing the cost amid already record-high inflation. i urge epa to reconsider proposal to provide much-needed relief for small refineries and the families and businesses being harmed by elevated fuel costs. i look forward to hearing more from our witnesses on this issue. next, i'd like to touch on an issue i believe many of us agree upon and that is that our liquid
2:27 pm
fuels and the chairman touched on this, are still very, very important. i can tell you firsthand, liquid fuel is not going away anytime in my state of west virginia. forcing a single technology approach, such as insisting on 100% electric vehicles disregards the important fact that different communities and businesses have different needs for transportation solutions. it may be true that electric vehicle sales are surely but slowly increasing, but the fuel not only in passenger vehicles, it's also important for heavy duty trucks and airplane to see name a few so one issue i'd like to hear about today is how important are liquid fuels and do you think liquid fuels are going away anytime soon? this conversation on liquid fuels is important as the program enters a new phase next year. when congress enacted the rfs, annual volumes were include for calendar years 2006 through
2:28 pm
2022, but after 2022, epa has the power to determine the annual volume amounts, and the chairman pointed out that we're not even hitting the amounts we're supposed to be hitting as it is now, epa expected to issue a rule to do just that sometime this year, however i have concerns about how epa plans to take action on this program without anyone in a senate-confirmed role in the office that handles the rfs program. the office of air and radiation at epa, this is the office that is in charge of air emissions and climate issues and handles the renewable fuel standard and many other complex, regulatory programs. yet, we have been waiting for more than a year for the administration, and the president, to name a nominee to that office. i talked about this more than once in our committees. instead, principle deputy a administer joe goffman served as lead political official in the
2:29 pm
office with regular communication with his former boss, climate czar in the white house, mccarty. no administration waited this long to send a nominee for its critical position since its creation, previous record was 260 days set by president clinton. if epa is recording significant actions with the future of the rfs program, the administration needs to send up an office of air and radiation nominee who can be accountable to congress. with that, mr. chairman, i yield back my time. >> thank you, very much, for those comments. now we'll turn to our esteemed panel of witnesses and a couple minutes in we'll hear from them in this order. first, the coryn wind, clean manager of oregon department of quality, next, chief executive officer of growth, third we'll hear from lucian -- let's see,
2:30 pm
pukliawesi? all right. would you repeat, would you just say your name for us. >> lucian polaruci. >> the p is silent? is really is. all right. thank you. next, president of the energy policy research foundation, finally last but not least, hear from lianne johnson cook, before witnesses begin their testimony, i'll turn it over to colleagues senator merkley to introduce our witnesses. >> thank you very much, mr. chairman and ranking member capito and fellow community members for today's hearing looking at the renewable fuel standard. as we look around the world at all the visible and measurable signs of global climate change,
2:31 pm
we need to adopt cleaner forms of energy and end our dependence on carbon-emitting fossil fuels. it's plain to see and i believe we have an incredible opportunity to reduce emissions by electrically powering cars, trucks, investments made in the infrastructure jobs act as well as those we want to make in build back better are important steps in that goal but there is no doubt that sustainable liquid fuels are going to play an important role for years to come as we strive to tackle the challenge of global climate chaos. not all of the solutions are going to start with the federal government. we're going to see states innovate and we need to learn from them and this is something we've recognized back home in oregon as year after year we confront fiercer wildfires, devastating our forests, historic droughts, devastating
2:32 pm
our ranching and farming communities and having huge impact on lakes and streams and acidyfying oceans wreaking havoc on sea life on the oregon coast and certainly our community so oregon stepped up to do more through the clean fuels program, since it began six years ago it's a resounding success. through this program, our state reduced significant greenhouse gas emissions and put us on track to immediate the goal of 10% reduction within the next three years. i think the success we had back home in oregon can and ought to inform the discussion for our nation regarding the federal fuels policy. oregon stands as an example fact that a low carbon fuel standard can work in the transportation sector which is why i'm delighted to introduce my fellow
2:33 pm
oregonian previously from had you been, from hawaii, she is a proud graduate of oregon state university with a proud degree in bioresources engineering, been an integral member of oregon's department of environmental quality u working the last 12 of them in fuels and transportation climate policy, as head of the clean fuels program, ms. wyn is responsible for coordinating between fuel importers and the clean fuels industry to ensure everyone has the tools and technical assistance necessary to transform our fuel market. we works to ensure rules and regulations align with those of neighboring states, certainly washington and california, to help make sure the states along the west coast are moving in the same direction. so i'm thrilled that she is with us today through the miracle of
2:34 pm
electronics, to share her experience about what has worked in oregon and how those successes can be implemented on a larger scale. thank you, mr. chairman. >> thank you, senator merkley, very much, and now will begin our witness testimony and start off with ms. wynn i ask you to please proceed with your statement if you are ready. go ahead. >> okay. good morning, members of the committee. for the record, my name is cori-anne wind, and i work with the department of environmental quality as clean fuels program manager. thank you for the opportunity to speak to you today about the clean fuels program, which is oregon's version of the low carbon fuel standard, i'd also like to thank senator merkley for the very nice introduction and your continued leadership in addressing the climate crisis. so the clean fuels program is one of oregon's most successful
2:35 pm
state-wide policies for addressing the state's contribution to global climate change. the program began in 2016 and thus far, the program's success and progress can be summarized in three distinct outcomes. so first, the companies that are producing biofuels are making those fuels more cleanly and delivering them in greater volumes to oregon. the carbon intensity of the ethanol and biodiesel that oregon uses has decreased and we've seen significant increases in the blending of biodiesel and renewable diesel in recent years. renewable forms of diesel, natural gas, propane and electricity have all entered the oregon market since the beginning of the program and emerged as commercially viable and cost-effective replacements of their fossil versions. electricity will become increasingly important as the
2:36 pm
new regulations and incentives for infrastructure are implemented and all of these fuels played an important role in reducing about 6 million tons of life cycle greenhouse gas emissions so far and displacing about 1 billion gallons of fossil fuel in oregon. second, the transition from fossil fuels to biofuels and electricity is reducing tailpipe emissions in oregon and improving the public health of oregonians. in addition to reducing greenhouse gases, low carbon fuels emit less carbon monoxide, nitrogen monoxides and particulate matter compared to fossil fuels and reducing these pollutents saved americans millions of dollars in avoided health costs over the years and this is especially important for oregon's historically overburdened communities located near transportation corridors
2:37 pm
and distribution hubs. third, the program has spurred innovation and investment without impacting the price at the pump. the program has fostered $100 billion a year plus market where investments are being made to increase the production of lower carbon fuels, spark new innovations and technology and invest in infrastructure to deliver these fuels across the state. these investments have allowed the transition from fossil products to cleaner fuels to happen without any significant rise in retail or wholesale prices when compared to neighboring states. even those that do not have similar fuel regulations and in fact, the program lowered the cost of many low carbon fuels and created a powerful incentive to decarbonize the transportation sector. so the clean fuels program that we have created in oregon takes the best part ofs of the renewable fuel standards and
2:38 pm
combines with best part of low carbon standard so the renewable fuel standard creates the base demand for fumes needed to begin the transition to lower carbon fuels and the lower carbon fuel standards ensures the lowest of the low carbon fuels comes to oregon. participants can stack the value of the credits from the renewable fuel standard with the credits from the low carbon fuel standard as both are necessary to provide the necessary incentives to fuel providers to continue to lower carbon intensities. the market also benefits from the long-term certainty from the low carbon fuel standard programs that have established targets through 2030 and oregon is currently in a rule-making that will extend targets and establish standards through 2035. we have not done this alone. oregon has benefitted greatly from being a signatory to the
2:39 pm
pacific coast collaborative, since 2013, british columbia, washington, oregon, california have worked together to organize best practices for policy alignment, program design and implementation to provide the largest market for cleaner fuels on the west coast. this collaboration has grown to other states that are now looking for smart strategies to reduce transportation emissions, ones that can build off of strong federal support of the agriculture and biofuels industry, zero emission vehicle standards, and investments in electric vehicle charging and alternative vehicle fueling infrastructure. so that concludes my testimony for today i'm happy to take any questions you may have. thank you again for the invitation to be here. >> we're delighted you're here, thank you so much, i'd like to say, find out what works, do more of that, some states come up with pretty good ideas we
2:40 pm
would benefit from so thank you for your testimony. next, we'll hear from ms. corre, thank you for joining us. >> thank you for the opportunity to testify today. i'm emily skor, ceo of growth energy, world's largest biofuel trade association. remains the nation's most successful clean energy policy yet its full potential as a climate solution remains up tapped, last eight years failure to comply with the law slowed progress, but as today, as we look to reduce the carbon intensity of our nation's transportation fleet is imperative biofuels like ethanol, the most abundant, and high octane, is critical, there there is no path to no emissions by 2050 without biofuels 95% of
2:41 pm
the cars on the road today use liquid fuels and will dominate new vehicle sales through 2050. we can achieve progress on carbon reductions with today's infrastructure, today's vehicles and a home-grown supply chain through robust and binding renewable fuld 'fuel standard and nationwide year on use of biofuels. to date, the rfs reduced about 1 billion metric tons of greenhouse gas emissions, expanded, drives energy innovation and economic growth, creates biomanufacturing jobs and lowers gas prices for american drivers but since 2013, rfs consistently under mined through abuse of waivers, small refinery closures, this is from a select view looking to subvert the rfs.
2:42 pm
epa's recent proposals, delayed as they are rights some of these wrongs. they include the required 15 billion gallons of conventional by oh fuel in 2022, a long overdue remedy for epa's unlawful 2016 general waiver and end to abuse of smaller refinery exemptions, despite these positives, epa takes a step backward seeking to reduce the blending obligations finalized two years ago. this retroactive change exceeds the agencies authority and creates market disruption and uncertainty. epa needs to fix and finalize the proposals as soon as possible. looking forward, to achieve our shared clean energy goals, we need year-round access to higher blends of ethanol. nation wide e-15 would slash emissions by 17 billion tons, support new job and see save consumers in annual fuel costs. unfortunately, refiners
2:43 pm
successfully sued to prevent e-15 being sold in the summer throughout much of the country. not only deprived consumers of a lower cost fuel, they eliminated an easy path for their own rfs compliance. without immediate action, consumers lose access to most affordable fueling option on june 1, when americans drive the most. congress or epa must restore market access so drivers can save up to 10 cents per gallon every time they fuel up with e-15, in addition to reducing emissions, biofuels are poised to you play a greater role in decarbonizing other forms of transportation and biorefineries already deploying carbon capture, wind and solar energy, and sustainable practices all drive further innovation and reductions in carbon intensity. we see promise in new and emerging carbon markets in hard to drive sectors like aviation, marine and heavy duty vehicles.
2:44 pm
to lead our energy through clean energy transmission we must have a healthy and thriving biofuel industry, strong and growing rfs, move toward e-15 as the nation standard fuel. don't be fooled, rfs does not harm refiners, three administrations and the courts affirmed this. claim tootz contrary are a smoke screen to divert attention from clean, affordable american energy, laying out of e-15 means increasing gas prices for american consumers, period. gas prices are driven by the price of crude, not the cost of the rfs. america's farmers and biofuel producers are ready to work with the administration and congress to restore e-15 and put the rfs back on track. thank you, and i look forward to your questions. >> well, thanks, very much for joining us and for your testimony. mr. reecy, another shot at your name, i think i'm getting closer at getting it right.
2:45 pm
you're recognized, please. >> let me queue up the charts please. >> chairman, ranking member capito, members of the committee, thank you for the opportunity to make some comments on the epa's renewable fuel standard and management of the program. i'm president of the energy policy research foundation, we've been around since 1944. i also want to thank senior director max bazir for helping me with the testimony and preparation of the charts. the first thing i'd like to say is that in all our work over the years, and we've testified here actually in 2018, i mean 2016. we have always said that biofuels, and particularly ethanol, represent a very important component of fuel supply to the u.s. it's a very cost-effective way
2:46 pm
to get octane and extend the supply. basic criticism of the program is not with biofuel, it's with the mandate. so let's go to the first part. if you can see the first chart, and chairman talked about this already, we're not hitting the original targets of the energy security act. in fact, there's a lot of reasons for that, and you can see now we're about 20 billion against the initial proposed target of 36. the basic reason we're not hitting the targets is because our expectations were wrong. there's a lot of uncertainty in the future of oil and gas prices and supply and demand, and in 2007, expectations were, a gasoline demand would grow dramatically, by about 30% over the next 20, 30 years. in fact, it declined dramatically and this made it more difficult to incorporate biofuels because when biofuels
2:47 pm
become a large percentage of the gasoline pool, the costs rise. they're actually kwies low cost and actually save money up to around above 10% compliance cost rise. you can see here, this is actually very interesting because when we testified in 2016, we informed the committee there was a certain price to the program, if you try to drive the biofuels by mandates above 10% of the gasoline pool the compliance costs escalate and as pointed out, the rin credits are a way to tell what the program costs. using cbo alone, the increase to consumers can be anywhere from 30 to 50 cents. well, today, rin prices are driving up the cost of gasoline about 28 and a half to 30 cents.
2:48 pm
as you can see this in something called the crack spread. i won't bore you with this, but in a way, the crack spread is what it costs to take crude oil and turn it into gasoline, diesel fuel and other petroleum products. you can see here that when we have a period, and i'm going to have, lianne's going to talk a lot about this, but before epa changed the rule on how to treat the credits under the exemption, the rin program actually, was the small refiner exemptions were driving down rin prices because it sefrmy increased the volume but that program ended, combined with the acceleration in prices as we come out of the covid and now have very high rin prices in the u.s. and that is reflected in this chart. the other issue i'd like to point out is we are now entering a period of very high oil
2:49 pm
prices. and in this period, preceding this, prices were low and many costs of the program were masked. as pointed out, a big percentage of cost of the program, of gasoline and products is crude oil. and i'd like to show you here, from california. the problem is, yes, crude oil might be contributing about $2, but an array of programs, low carbon fuel standard, rfs, federal taxes, are of these are contributing to the cost. and so we just have to keep this in mind. one of the components of high gasoline prices are these programs. now, i think i'll just flip to the, the end of my comments here that as we go forward, our future is very uncertain and i
2:50 pm
really encourage congress to, one, give some guidance to epa. because unless we have a set of programs which are robust against uncertainty, we're likely to have a lot of dislocations and this is the fundamental problem in the program, with the use of the mandates. thank you so much. >> thank you very, very much. last but not least, we thank you for your testimony. please proceed. >> thank you, chairman carver, ranking members of the committee, for the opportunity to talk about the renewable fuel standard. i spent the entirety of my 30-year career representing the petroleum refining industry and particularly small refineries. i know their companies, i know their people, i know their communities, and now i also know
2:51 pm
the very real threats they face as a result of the proposal to end the refinery hardship under the standard. i am referring of course to what the senator described in the december 7th, 2021 proposal to issue a blanket denial of all pending small refinery hardship petitions. the epa's deadline to issue the decisions was 90 days after the petitions were submitted and instead they now intend to deny them retroactively, causing small refineries to enter the market to buy at near record highs. most important and most telling is the fact that epa's proposed denial did not reference its legally required consultation with the department of energy, and the department of energy's conclusion that if epa acts as they propose to do, small refineries will be at risk of shutdown and bankruptcy, notwithstanding that advice from
2:52 pm
the department of energy of legally required consultation, epa is moving ahead with its plans. certainly this was material information to parties asked to provide comments on the fate of small refineries. senators, i'm sure you are aware of the fact the gas prices are at the highest levels in eight years and that the inflation rate is increasing faster now than in the last 40, and we are at a crossroads. if epa persists ignoring its statutory duty and taking aim at america's small refineries, it will not only violate the law, it will exacerbate these already adverse economic conditions the country faces. the harm to refineries and the u.s. economies will be harmed for harm's sake because denying small refinery hardship relief cannot and will not affect one gallon of biodiesel.
2:53 pm
no biodiesel blending will be lost. at congress' direction the department of energy in a 2011 report determined that small refinery hardship would grow increasingly acute as the volume mandates increase because as the volume mandates increase, rin prices increase. when rin prices increase, small refinery costs increase, and that is because small refinery hardship is caused by their limited ability to blend, not their unwillingness to blend. epa's 2021 proposed denial concludes that a small refinery with limited access to renewable fuel blend stocks, no downstream blending capability, no retail capability, no pipelines to access lucrative product markets, will have the exact same cost to the penny to comply
2:54 pm
with the renewable fuel standard as the largest integrated oil company in the united states. companies that have the ability to export their fuel and avoid the rfs mandate completely, companies with the ability the ability to blend other fuels by small refineries to generate excess rins and the ability to take those and trade them, speculate in them in the wholly unregulated $30 billion rin market. large integrated refineries report in their public reports earning tens of millions of dollars in profits speculating in rins. i listened to a hearing talking about the harm to the biofuels industry from granting small refinery hardship relief, which is a fiction. small refineries first of all disproportionately produce diesel, not gasoline. they blend as much ethanol as they can, but gasoline is a
2:55 pm
small part of their production. the data demonstrates that there is zero correlation between small refinery hardship relief and the blended rate generally, so in the years when the hardship relief was granted, more than in the prior years, there was zero impact on the blend rate. so this is a question that we have to have explained to us because there is clearly no correlation between the two. forcing small refineries to buy rins in a record high price will result in their failure. it will result in their closure and bankruptcy according to the department of energy and epa needs to step back. >> have you concluded your remarks? >> yes. thank you. >> thank you so much. i would ask unanimous consent to place in the record materials on historical fuel and energy
2:56 pm
prices. hearing no objection, so ordered. the past administration's mismanagement of the renewable fuel standard along with the ongoing fuel impacts of the pandemic have created volatile swings in compliance costs for the renewable fuels program in recent years making it hard for all stakeholders to plan and invest to meet the program's requirements. it's my understanding that oregon has not experienced the same volatility in the compliance cost with its clean fuels program. my question is, how are the flexibilities built into oregon's low carbon fuel standard along with the additional cost containment and other measures in oregon's program that differ from the federal program. how do they help to mitigate the compliance cost spikes? >> yeah, thank you for that question.
2:57 pm
i think a lot what is built in to the program is the ability of the agency to monitor the cost. the prices that are delivered in california and washington and idaho and for the past year or so we haven't seen a significant comparison. those are states that also don't necessarily have additional fuel standards. we do keep track of those places and we are legislatively required to have cost containment mechanisms in the program to be able to monitor those fuel prices. and so i think it is a combination of the monitoring
2:58 pm
and the mechanisms that have not caused these volatilities in the fuel prices in oregon. >> a quick follow-up. it is my understanding oregon tracks consumer fuel costs and surrounding state fuel costs as part of its implementation of the low carbon fuel standard. very briefly are there surrounding states that do not have the low carbon fuel standards today that have higher fuel costs than oregon? >> thank you for that question, chair carper. so as i previously stated, the most recent analysis of the data that we have been looking at, we do compare the fuel prices both retail and wholesale to the states of washington and california, idaho. it is noted that our fuel prices in oregon have shown that we're lower than the state of idaho.
2:59 pm
the staid of idaho does not have any additional fuel regulations. we feel confident that the prices of the fuels in oregon are not being disproportionately impacted by the fact that we do have a low carbon fuel standard. >> all right, thanks for that. one question if i could on e-15 and advanced biofuels. recent court decisions prevent sale of blends of ethanol to e-15. this coming summer unless congress or the administration takes some further action. at the same time the epa over the course of several different administrations has been slow to approve the advanced biofuel applications for the new pathways and fuel for the renewable fuel standard question. in your mind, with the approval of additional advanced biofuel
3:00 pm
applications, does this help mitigate some of the volatility in renewable fuel program costs that we're seeing today? >> it most certainly. the easiest path to bring down the prices to blend more biofuel. basic supply and demand. the more blended in particular higher blend like e-15, the more rin created and that's how you bring down the price. so not only is that going to be addressed but you will be introducing a lower cost fuel supply for consumers and there are also technologies languishing in epa with producers currently producing cellulosic ethanol that are not getting credit for because the application has been sitting around for five years. so if there's more innovation we do need some certainty and predictability and for the regulations to keep up with the marketplace and innovation. >> i'm going to yield.
3:01 pm
thank you for those responses. >> thank you, mr. chairman. in your remarks you were pretty clear about the small refinery exemption. obviously i mentioned that in my opening remarks and you are probably aware of the the case that i brought forward in west virginia of two favorable court decisions from the fourth circuit. shouldn't epa take into consideration that our courts have actually taken into consideration making regulatory decisions and that this was causing hardship to this small refinery? how would you respond to epa's blanket denial of everything when the courts have actually come forward and said it's not a sound decision? >> yes, senator, you are exactly right. for the 2016 to 2018 compliance,
3:02 pm
the fourth circuit court vacated and remanded the decision to deny hardship relief to west virginia. they produce about 23,000 barrels per day and it's one of the smallest refineries in the country. the court rejected the decision because the epa didn't consider the facts of ergon's specific case. its location, how it distributes its fuels, the fact 70% of its then production was diesel. it remanded to epa. epa then took another shot and denied the petition even though it had been vacated and remanded by the court and again determined that it was ineligible. the second time the fourth circuit vacated the decision
3:03 pm
this time finding epa had been arbitrary and capricious in treating ergon different than any other small refinery. so now this is the third attempt to prevent west virginia from preventing ergon from receiving hardship relief. essentially what the epa is proposing to do is for every other small refinery in the united states will be denied hardship relief if the epa proceeds on this path. ironically, on the basis that every refinery in the united states from the largest multinational oil company to the tiniest small refinery in west virginia has exactly the same cost of compliance. it doesn't matter that a large integrated oil company can export. it doesn't matter a large integrated oil company has excess rins and makes millions in speculation. everybody's cost is the same and so i always go back to the study prepared for congress which
3:04 pm
explains the hardship that small refineries will suffer as a result of their inability to blend, as a result of their inability to take massive amounts of capital and joint venture. >> thank you. >> so, yes, you are correct, senator. this is the third attempt to divest ergon of relief. >> and specifically we made exemptions for small refineries. >> that's correct. >> thank you. and i was looking through your charts, and it talks to me about where we see gas prices going, and who really gets hurt the most. it talks about the rising cost of transportation fuels harms low income and many low income communities.
3:05 pm
if you have to pay an extra $10 to $15 to fill your car up, that hits that person that at the end of the month is looking for an extra $10 or $15 to help pay their electric bill or some other bill that's also rising at the same time. you also talked about the cost of blending is about 28.5%, 28 to 30 cents per gallon, so there is a cost there. then you also mentioned to me before we got started that you think as we are moving forward, there are some guardrails epa needs to have as we are moving forward that we can provide for them. if you want to talk about that issue i'd like to hear that, but i also like to hear your opinion on the overall cost of what we see now, high cost of gasoline and how we can deal with this issue of who is hitting it the hardest. there's a proposal to get rid of the gas tax, but that's 18 cents that's not even close to this. >> first, let's talk a little bit about the government mandated energy transition because we are the largest oil and gas producer in the world
3:06 pm
and we are very concerned that certain policies are seeking to constrain north american production platform before the alternatives are ready. we are going to have -- we are going to produce a lot of evs, alternative fuels, and technologies, but if we proceed between 2010 and 2020, the united states alone, plus the application of biofuels, provided over 80% of the increase in demand for liquid fuels, so that's the first thing we need to think about. we should treat this north american production platform as a strategic and economic asset which we need to be careful before we decide to disrupt it. so that is the biggest program that we have to keep the gas prices under control. the next thing is that we are
3:07 pm
fighting over a small volume because in the absence of the mandate, we would still be blending anywhere from 8% to 10%. ethanol is a valuable feedstock. it helps to make octane requirements and other biofuels. but if we proceed with a mandate, we kind of prohibit innovation and alternatives that come forward because we have no idea what the fuels of the future are going to look like. then the final point, this is devastating for low income communities, as you can see from that chart. everyone who wants to proceed with these exotic fuels of the feature needs to keep in mind, i don't believe the american people will respond positively if we enter a period of sustained high gas prices.
3:08 pm
>> thank you. >> senator cardin was here earlier and i think now joins us by webex remotely. please proceed with your questions. thanks for joining us. >> i appreciate this hearing very much. it's long overdue. the history of the renewable fuel standards is something that needs to be understood and we need to update this, so i appreciate your leadership. there's many competing priorities. we have energy security issues and we have the environment and our concerns for climate change. we have the cost issues we just talked about. there are a lot of governmental subsidies that affect the cost issues. and then we have the food stock. so i would like to know what can we do if we want to focus on development and growth of domestic advanced biofuels
3:09 pm
derived from non-food based food stocks, how should we be adjusting the policy with regards to the renewable fuel standards? don't be bashful. >> i think that the way to do this is to allow a lot of the alternative biofuels to compete in the marketplace for the liquids market. and for those that have promise we should have a good research and development program and even some support for probably deployment but in the end we should allow a large opportunity for consumer choice and for competition to take place between manufacturers and processors of fuel to deploy these into the marketplace. >> i will go ahead and follow on
3:10 pm
those themes of choice and competition, two themes that we wholeheartedly do support. consumers do need choices. they need options at the pump and it's unfortunate come june 1st, one of the lowest cost options available to them is going to be eliminated because the refineries were sued in court. so we've got to reintroduce the higher blends, that's giving consumers one low-cost choice. when it comes to competition as we all pursue lower carbon intensive energy, that's very important and critical to that is making sure the modeling and incentives are technology neutral. in this country, let the best win, right? let's make sure we are looking at the full lifecycle analysis of the available solutions. we are going to need everything to achieve these climate goals
3:11 pm
so make sure it reflects up to date science, innovation taking place within agriculture to bring down the carbon intensity, and then we will have a competitive environment with choice for consumers. >> i would just mention in that regard, we both serve on the senate finance committee and we had looked at proposals to try to have neutral in regards to the tax issues and reward those that are lower in the carbon emissions and help our environment. so we agree with that. the problem is that today's structure does reward certain high carbon sources and we don't really have a level playing field. i don't know if the other panelists want to respond to this or not. >> yes, thank you for the question. i think what i would say is that
3:12 pm
this is what the core of a low carbon standard does. it really does reward the carbon intensity of the fuel, so as you mentioned, going from a plant-based to a waste oil for biodiesel, for example, it means the fact that they do have lower emissions means that they do have higher incentives, in a low carbon fuel standard, so those incentives bring down the cost of those fuels. so that is what happens with a low carbon fuel standard and i think it's been working really well for the lowest. >> that is some of the debate we are having right now. thank you, mr. chairman. >> thank you. before we return i would ask unanimous consent to submit for the record of various materials demonstrating recent strong economic growth including a statement from the assistant
3:13 pm
secretary for the policy at the department of treasury from january 31st, 2022. according to the statement, real gdp growth grew 5.5% over the four quarters of 2021. fastest annual pace in 37 years. this is in addition to the materials i submitted earlier which show the energy prices today are still lower than they were in 2007 and today's prices at the pump are driven by growth and fuel demand as the economy emerges from the pandemic. without objection. next, senator inhofe, and he will be followed by senator whitehouse. >> thank you, mr. chairman and before you start the clock, i want to experiment with something i haven't tried before. i have two questions. but the first question has four parts. rather than put mr. johnson in the position of having to write
3:14 pm
it down fast, i'm going to ask my staff to hand her the written copy of those four questions, which i will read now. first of all, ms. johnson -- >> the senator's time is expired. >> i didn't do that to you. >> okay, go ahead. >> denial of the small refinery exemptions which we have in oklahoma ultimately drive the gas prices up and does the data support the assertion that the exemptions lower the blending and please describe your understanding of the epa's stakeholder engagement regarding the proposed rule, and is there data to support the claim that epa denial of hardship to small refineries would contribute to the closure of the refineries and lost jobs? anything that's already been answered, we can go over that fast. all right? >> thank you, senator, and thank you for the list of questions. so, with respect to the first
3:15 pm
question of whether denial of small refinery exemptions will drive compliance costs higher and gas prices higher, it is a certainty. if epa publishes the proposed denial, the parties holding the rins that smaller refineries need for compliance will be in position to demand exorbitant prices because small refiners will be captive buyers on the eve of the compliance deadlines. multiple compliance deadlines on top of one another because epa has been so delayed in its rulemaking. this is assuming that rins are available at all. so my small refineries do not have the rins that they need for compliance. they are physically unavailable, not -- no more 2019s are available for the compliance, no more 2020s are available for compliance because as epa described, parties' uncertainty about with the ultimate volumes will be are holding onto their excess rins. so it is a recipe for crushing small refineries.
3:16 pm
it is a recipe for escalating rin prices. they will get much worse if the epa moves forward with its proposal. gas prices will increase with rin prices for parties that can partially or fully pass through their costs, for example large integrated oil companies and large exempt retailer chains. and small refineries will be forced to violated the violate the law without hardship relief, shutdown, curtail, or go bankrupt. those are the department of energy's predictions. with respect to your second question, senator, does the data support the assertion that small refinery exemptions lower the blending of biofuels, i want to answer that in two parts. first of all, epa's current proposal relates to compliance years 2019, 2020, and 2021. it is impossible to blend any more fuel in those years. those years have already closed. so, no. no biofuel blend rate will go
3:17 pm
down. and essentially the other proof, there's a lot of discussion about the 2016 to 2018 timeframe when the prior administration granted more hardship relief than it had historically. during the period of time when small refinery hardship increased, so did the blend rate. and the simple reason is, small refineries cannot meaningfully impact the blend rate. the blend rate is -- the blending is done downstream. the only question is whether or not small refineries are going to make massive wealth transfer to the large integrated oil companies and large exempt blenders that hold the rins needed for compliance. your third question was to describe stakeholder engagement with refiners regarding the proposed rule. i can say this. small refiners were blindsided by epa's proposal to retroactively deny all 2019 to
3:18 pm
'21 petitions years after the statutory deadline to issue their decisions had passed. epa checked a box. they met with us on august 25th of 2021. they shared no substance about their plans to issue retroactive mass adjudications and denials for small refineries. the proposal matches entirely instead the asks of the biofuel industry, which seems to have meaningful engagement with epa and seems to have engaged with the usda. and by the way, congress decided that the appropriate consultation was with the department of energy, not agriculture. and the department of energy is, as i've said, has determined that epa's plans to deny hardship relief will result in a shutdown and closure of refineries. your last question, senator, was whether there's data to support
3:19 pm
the claim that epa's denial would contribute to the closure of american refineries and less jobs. and i won't repeat what i said previously, but essentially, a number of small refineries do not have the rins they need for compliance, and if they are denied relief, they will be captive buyers in a market with escalating rin prices and epa has acknowledged that there was a shortcoming in the production of rins for the 2019 compliance year and the rins that are available in the market are not in the hands of small refineries. so small refineries will necessarily violate the clean air act because they will not have the ability to get the rins they need for compliance which will then force them to decide between spending money on rins if they have it, shutting down, and/or going into bankruptcy. senator, i hope i've answered each of the questions. >> excellent, and you've done it in just the right amount of time.
3:20 pm
the gentleman's time is expired. go ahead, just briefly. >> i had one last thing and that is, i know you talked about this and answered a question and addressed this also, but, in terms of the risks an entirely electric fleet? >> we're energy independent now. we have to move materials and minerals which we will be highly dependent. some are sourced from countries that are not necessarily friendly to the united states. if i may just correct one, one question i thought was very interesting. it's important i understand that
3:21 pm
oregon has the fifth highest gasoline prices in the country. so it may be lower than some other adjoining states but gasoline prices are quite high in oregon. >> thank you. all right. senator whitehouse, you are up. >> thanks, chairman, and thanks, everyone, for being here. i have long supported the biofuels and ethanol standard, but it's kind of been an act of faith that someday the market would come around and that corn ethanol in particular was kind of a pathway effort that would let the cellulosic ethanol and other forms come forward. so i'm interested in your testimony about the carbon intensity of the ethanol and
3:22 pm
biodiesel that oregon uses, that it's decreased. i wonder how confident you are in the measure of carbon intensity of your corn ethanol fuel stock. >> yes. thank you for the question, senator. so, we do use the oregon model to calculate carbon intensity in the state, which is the accepted national model to do so. with respect to the ethanols that we are receiving an oregon, the import of that fuel is producer specific so we can keep very close track of the different ethanols that we are getting, and what we are seeing is incremental decreases in the carbon intensity. so for ethanol over the past six years, it has continued to go
3:23 pm
down probably at about 10%. the carbon intensity of the biodiesels have had a more significant decrease. but it is steady and it shows that there is value in the low carbon fuel standard to continue to draw down those intensities. the facilities are getting more efficient and better at their energy inputs and that is reflected in the lower intensity scores. >> you mentioned cellulosic ethanol, i believe. what is the market share within the ethanol market of cellulosic ethanol? or in your portfolio, if you know that better than the national market. >> yes. thank you for that, senator. as far as cellulosic ethanol, we don't have any cellulosic ethanol companies in the state of oregon so the ethanol that is coming to oregon is not
3:24 pm
cellulosic but it is decreasing in the carbon intensity. >> how much of it is corn? >> 100% corn. >> okay. there we go. one of the things i think we need to do in order to find a pathway to climate safety is to put a price on carbon. that seems to be a fairly commonly held view among economists and banks and so forth. and among people who are looking hard at the climate problem for emissions reduction solutions. and at present, the absence of one is a massive subsidy for the fossil fuel industry. the international monetary fund calculates it north of $600 billion per year just in the united states. $600 billion per year is an enormous number and provides a very strong motive for a massive
3:25 pm
political elections lobbying operation by the protected and subsidized fuel to defend and protect its subsidy politically. so we are in a kind of difficult position here in congress. i'm wondering, back to you again, if there were a price on carbon, how would that affect the ethanol portion of your fuel market? >> yeah, thank you for that question. so, in effect, the way the low carbon fuel standard works is that we are -- the monetization, the value is in the credit prices that are being traded in the program. so this is a market that we do not control.
3:26 pm
the market contributes to the credits traded within the treated within the program, so currently speaking, the credits in the state of oregon are trading at about $125 per ton. it's been higher. it's been lower. we publish that on a monthly basis to show transparency to the market, and so, you know, there is certainty in what that credit price is that is associated with the carbon, so that's how we do it in the low carbon fuel standard. >> my time is up. chairman, thank you very much. >> thank you. senator kramer? >> thank you, senator, thanks to all of you for being here. this is a topic that has perplexed me since the day i got to congress. it's not the topic that perplexes me as much as the debate. it never changes. a lot has changed since 2005 and 2007, since the rfs was created.
3:27 pm
we have an abundance of natural resources, and a administration pushing for up to $12,500 per electric vehicle subsidy, to change the demand for electric vehicles. i'm just going to state some facts, and i'm going to ask for some feedback. we had this debate over this constantly moving target. several of us have had this discussion. what i would say, it would be as a result of lazy legislating, which i'm convinced is a historical phenomenon in this country. administrations have been given an awful lot of leeway. those hardship waivers are another tool. and then for four years it's one way then another and then another four years it's another way.
3:28 pm
i know a couple of you and i have had this discussion but it seems to me that at the end of this year, for the last decade several people would like to deny at the end of 2022 there is a new rule in place that they are no longer in law. they're in law, but they're not reviered. the authority is the epa and the administration has more unilateral authority after this year. and i would like to have a little discussion from the panel. what is the understanding of the act, when the rbos switch over, when the epa gets carte blanche authority in 2023 to set the rbos, if nothing happens, and they have this authority? >> thank you, senator. i think that's an excellent
3:29 pm
question and something that keeps me awake at night because i see a freight train headed toward the highest possible rvos to try break through the blend wall and to promote e-15. the epa have discretion to set up the program in such a way that it distorted competition. and growth energy has stood shoulder to shoulder with the institute which is preventing the closing the blender people. so the theory is, just keep pushing and pushing. at some point, e-15 will happen. e-15 won't happen before every small refinery is shut down. right now, we're counting on volunteer blending. what we call the blender
3:30 pm
loophole. small refineries do not have the ability to blend. until this market distortion is fixed, it's a recipe for destroying those refineries that cannot blend. if we want to keep pushing e-15. if we have in fact determined that e-15 result in reductions of greenhouse gas emissions, which i don't think we at all agree with, we need to fix the structure of the program. and i was interested in cost caps and limitations on the ability to speculate on the cost and obligating blenders, all of these proposals to fix the things that are preventing renewable fuel blending has not occurred. so if we just go straight ahead, we're just going to collateral damage our industry.
3:31 pm
>> first of all, i want you to be able to respond to that. but couldn't a future administration, instead of pushing e-15, just eliminate, could they go to zero, or one gallon, something like that in the law? >> thank you for the question. after 2023 there are no congressionally set blending refirements. things they have to consider job creation, energy independence, and environmental impact. and one of the things we have all suffered from is a lack of certainty and stability. if there's an obligation or deadline, it needs to mean something. one of the things we look forward to is the opportunity to set nlending requirements similar to what was in oregon to help address some of the
3:32 pm
volatility concerns. >> thank you. i wish we had more time. maybe in another round, mr. chairman. but the biggest point i want to make is 2022 is here now. it's not in the future anymore. we have to come up with something, and i would rather come up with it with everyone in the room. in f if you know what i'm saying. >> as long as it includes us. thank you. thanks, senator kramer. senator duckworth, i think you're out there on webex. if you are, please proceed. senator duckworth? no? senator lomas is with us live in person. and then another senator after you by webex. >> thank you, mr. chairman. i like to begin by asking
3:33 pm
consent to enter three documents into the hearing record. one is from the national academy of sciences called environmental outcomes of u.s. renewable fuel. the second is a study by the downstream impact of u.s. biofuel policies. and the third is an article entitled asking biden to rollback biofuel requirements. >> is there objection? hearing none. >> thank you. thank you very much. we've already heard testimony that the rfs mandate is adding 20 or 30 cents in a time that
3:34 pm
fuel prices are extremely high adds to the hardship of consumers and i beleve we should look at every avenue to provide relief to consumers. when i'm in cheyenne on the ranch i grew up in, in the house that i grew up in, it's next to a small refinery. it lost its refiner exemption. and then furthermore they were unable to, when refining for hydrocarbons, they were absolutely unable to purchase non-hydrocarbons to blend to meet the renewable fuel standards. so they converted the oil refinery to a refinery that now
3:35 pm
refines soybean oil. that refinery went from 260 livable wage jobs to 60. we lost 200 employees in cheyenne, which is a huge number in our little community. so this has had an enormous impact on our communities. and this happened during the previous administration's tenure. i didn't see them slow walking the loss of the small refiners exemption. i saw them putting the hammer down, and costing small communities like mine hundreds of jobs.
3:36 pm
so, when congress created the biofuel mandate, we predicted that the program would disadvantage small refineries. and of course it has. it increasingly precludes refineries from selling their products. so this squeezes the smallest firms first, and most severely. higher cost producers are harmed the most. is this an effort to ensure that, much as we did with banks, you're too big to fail, or too small to succeed? and in the case of small refineries, are they too small now to succeed? >> senator, i might just -- if you think about the american sort of refining complex, we
3:37 pm
traditionally had a lot of oil production produced and processed on the gulf coast, then the products moved up the continent. but of course with the emergence of production in north dakota and the energy independence in the u.s., the smaller and regional refiners became more important. they play a vital role. and as i said the solution remains in order for all of these facilities at the different cost structures they need an open market and the fundamental problem they all face are these mandated requirements to blend, which do not yield any benefits even to the farmers. we're fighting over very small
3:38 pm
volumes. if we were to open it up, and have some broad, just some broad support for the, you know, moving biofuels forward, we would all be a lot better off. and these kinds of dislocations would tend to disappear. >> ms. johnson, same questions. >> one of my small refineries said to me we dance between the toes of giants. the smallest refinery in wyoming, west virginia, in whatever community, they dance between the toes of giant integrated multinational oil companies. until the renewable fuel standard came along and said we will tilt the competition in favor of the large integrated oil companies, but don't worry. we've got your back. congress said specifically we
3:39 pm
recognize the volume mandates and the inability of small refineries to have access to capital to become large integrated oil companies that don't have access to pipelines to disproportionately produced diesel fuel, or blend stocks, don't worry. we will have your back and provide an exemption. small refineries blend everything they can but they don't always have access or the ability. so what happens is they are captive buyers in a wildly inflated rin market, and that's how they're harmed. and 2019, 2020, 2021, where epa has proposed to deny hardship relief. not one more drop of renewable fuel can be blended.
3:40 pm
so what we are talking about os epa compelling small refineries to make massive wealth transfers to oil integrated companies because they don't have access to feedstock because they cannot bland and it is unamerican. >> and that should be the focus in some of the work of what we do to have a better renewable fuel standard program. because we're just assuring that only the big integrated companies will succeed. and all of the small businesses will fail. once again, they are moving people out of small rural communities and into the bigger areas that have the bigger refineries. it's is happening in so many industries.
3:41 pm
it's having a profound effect on america's jobs and demographics. there has to be a way to encourage renewable fuels at the same time that you don't make it all about the small fail and the big survive and thrive. thank you, mr. chairman. i yield back. >> thank you very much for being here and for those questions. senator duckworth, have you joined us yet on webex? >> yes, i have. >> you're recognized. please. thank you. >> thank you. as some of the comments made today demonstrate, there is no end to the list of things blamed on biofuels.
3:42 pm
it's largely determined by oil prices and basic supply and demand. could you address the claim that rin prices are somehow responsible for retail gas prices? >> thank you, senator. yes, those are false claims. the price of the rin has no bearing on the price of the fuel at the pump. those are entirely separate markets. the dominant factor driving the price of fuel is the price of crude oil. and supply and demand. what's really important to understand is the role of biofuel to bring down the price of biofuel for the consumers and the price of e-15. consumers in 31 states today can put in standard 87, or an 88 octane, a 15% blend. when they have a little bit more ethanol, that brings the price
3:43 pm
down, they're saving up to 10 cents per gallon. and some places, you can buy 0% ethanol. then you have a premium not to have ethanol, so most assuredly they bring down the cost of gas prices. >> and it is impressive that oil providers survived through actions taken more than 15 years ago. and my understanding is that under the last three administrations numerous companies are on public record refiners are downstream and not done harm by the amount of money provided to buy rins. can you help us to understand despite the argument of big oil oil refiners they have managed
3:44 pm
to purchase and stay in business? >> thank you for the question. the rin affords the refiner flexibility on how they demonstrate compliance. they can blend biofuel or they can purchase so they have the flexibility to do this. so it's been more than a decade for the businesses to understand the annual obligations to make this decision accordingly. and it's important to understand the rin marketplace and the volatility, that you see those that are choosing not to blend and wait until the 11th hour then seek an exemption or waiver or extension from the agency. that's what you see the volatility come into play. but the bottom line is, the more biofuel, the more consumers will save. >> mr. chairman, i'd like to enter into the record 2015 and
3:45 pm
2017 and 2021 analyses that confirm this. one is indicating among other things with the carbon intensity was 39% lower. and it has decreased on existing cropland. and according to the usda the amount of fertilizer required to produce a bushel of corn has fallen dramatically since the creation of the rfs. >> is that your unanimous consent request? >> yes. >> any objections? no. >> i ask unanimous consent to include in the record with this hearing report from environmental health and
3:46 pm
engineering, documenting the $1 billion of reductions attributed since 2007. and third a study published by usda about greenhouse gas assessing recent evidence. and finally, a study that found corn ethanol is diminishing ghg emissions. >> is there an objection? hearing none. so ordered. >> thank you. these studies confirm what we already know and those that are reducing those emissions to play an integral part in these efforts. thank you, mr. chairman. >> senator, you have been patient.
3:47 pm
thank you for your patience. senator, are you there? >> i am here. thank you to the senator, i appreciate so much working with her on these issues. and i appreciate very much you doing this hearing. i want to just take a step way back for a moment and frame this. i think it's been framed as big refiners, small refiners, and so on. this is really about whether we're going to have, continue the dirtiest kind of fuels or have cleaner fuels. if you go back 100 years, henry ford and thomas edison first tried to do a vehicle with a battery, but could not get public government support to help them create the innovation. two years later, the biggest permanent tax credits for oil and gas were embedded in our federal tax code, and they've been there 100 years.
3:48 pm
at that time, folks picked a winner and they won. now we're trying to just balance that out with giving opportunities to biofuels, electric vehicles, wind, solar, and so on. all of which starts and stops. it's not a consistent policy, not embedded in the tax code. when we look at, from the business standpoint, the importance of policy and regulatory certainty, when you're making investment decisions, innovation decisions, and so on, how important is that? >> thank you for the question, senator. that's incredibly important. it's a very good example, my industry is producing cellulosic biofuel, but we're not getting credit for it. we as a nation, we're leaving carbon reductions on the table. and the impact is, you have
3:49 pm
innovators sitting on the sidelines because of a lack of certainty and a lack of a marketplace moving forward. therefore they're going to sit this one out. that stifles the investment we need to continue to bring down the carbon intensity of corn ethanol, and to be able to get our industry to net zero, and participating in the hard to electrify space. >> thank you. and just one more time for the record, do biofuels, are biofuels responsible for high gas prices? >> no, quite the opposite. the more biofuels we introduce into the fuel supply, the more we bring down the price at the pump for every driver. >> and it's also jobs in rural america, in rural michigan. one other question, i have to ask, as somebody who is a supporter of biofuels and rural
3:50 pm
jobs, but also electric vehicles being made in my great state, both are important to reducing fuel prices. and for the record, it's important to say that's why the united auto workers standard as well. in fact the uaw is the largest private union in iowa with members employed by companies making farm equipment and they consistently talk about the fact that they are supportive. does growth energy agree that both electric vehicles and biofuels are critical to reducing carbon emissions and petroleum use? >> yes. we appreciated uaw having very strong remarks in support. we have very ambitious climate goals and there is no one sized fits all solution. we're going to need every tool in the toolbox which means biofuels alongside electrification.
3:51 pm
the benefits of biofuels, those will be for the immediate, mid, and long term. in the medium term we have about 270 million cars on the road today. biofuels allow us to have a solution for those cars, to bring down the emissions, clean up the emissions and do so affordably. in the mid to long term, if we are a strong industry today, that allows us to have the innovation that we are continuing to do to further drive down the carbon intensity of our low carbon fuel but also participate in the hard to electrify space. we need to make sure the incentives provide a fair level playing field for all of the parties who want to participate. >> thank you. i agree. mr. chairman, i will yield back and yield to my friend from iowa, senator earn is it. >> senator ernst, your patience is rewarded. >> thank you. i ask for unanimous consent to
3:52 pm
submit to the record comments from the renewable fuels association and the clean fuels alliance. >> i think we're going to set a record here for unanimous consenting requests. without objection, so ordered. >> outstanding, thank you so much. >> just to address some of the issues brought forward, just looking back at the average closing price of crude oil in 2020, it was $39.68 a barrel and the average closing price in 2022 so far is $85.72 a barrel. today it was $95.46 per barrel of crude oil. is that due to the rfs to our witnesses? emily? >> i'll go ahead and take that one. absolutely not. the primary factor in terms of the cost of fuel at the pump is going to be the cost of crude oil. it has nothing to do with the rfs.
3:53 pm
>> thank you, ms. skor. i think the point our members are trying to make today is the cost of fuel is because of the rfs. it's not. it's about the price of oil. so i reject that. i hope that folks out there listening are paying attention to that. the price of our fuel is the price of oil. we've had the rfs around for a number of years and the reason we have is because congress asked for the rfs to be established. so we could reduce our greenhouse gas emissions. the folks across the midwest our farmers, our producers, responded to the call to congress, and they developed systems that produced clean, reliable energy sources. i also reject the premise that oil refineries and their rural
3:54 pm
communities are more important than my rural communities. as we're looking to 2023 and beyond, america's farmers and the biofuels sector are best positioned to work with this administration and others to put the renewable fuel standard back on track and be part of the solution to secure a clean energy future. as much as the biden administration dreams of an all electric world the reality is liquid fuels are here to stay. with 98% of cars and trucks today and nearly 80% of new vehicle sales projected in 2050 running on gasoline or flex fuel, biofuel is the key pathway to decarbonizing the transportation sector. the rfs is the policy engine that makes this possible. congress passed the energy policy act of 2005 and the energy independence and security
3:55 pm
act of 2007 which mandated the rfs in part to help reduce america's dependence on foreign nations. folks, i firmly believe energy security is national security. while president biden claims to support america's clean energy economy, he is turning his back on the rfs in favor of electric vehicles, which will only make us more dependent on china. science is on our side here too. biofuel has enabled the u.s. to cut emissions from the transportation sector for other a decade. between 2008 and 2020 the rfs saved nearly 1 billion metric tons of carbon dioxide equivalent greenhouse gas emissions, and it's only getting cleaner. the latest research shows corn ethanol is 46% less carbon intense if than petroleum-based gasoline and biodiesel is 74%
3:56 pm
less carbon intensive. biofuel can further reduce greenhouse gas emissions with carbon capture and sequestration technologies and on farm practices, which many of our iowa farmers are already doing. let's follow the science and use biofuel as a clean energy policy. it's not only a clean energy source. biofuel is also great for our economy and our pocketbooks. iowa corn and soybean farmers had record high crop yields in 2021. the biofuel industry accounts for over $5 billion of gdp, generates 2.6 billion of income for households, and supports nearly 46,000 jobs in iowa alone in my rural areas. ethanol is also the cheapest form of fuel for consumers right now by about 50 cents.
3:57 pm
50 cents. certainly with record high inflation, it only makes sense to make this fuel source more ready available. that's why i continue to urge the administration allow summer time sales of e-15 as soon as possible. it will not only support our consumers, it will also support nearly 300 retail stations in iowa who want to provide a cleaner choice at the pump. folks, the rfs is the law and refiners have had over 15 years to come into compliance, blend renewable fuels or buy rins. it's your choice. any claim that rin prices are increasing gas prices is a bunch of hogwash. refiners claim they need exemptions because rins cost them money. but the last three administrations have said rin prices do not cause harm for refiners. small refinery exemptions go against congressional intent and
3:58 pm
the supreme court reinforced this. a strong rfs supports rural america and increases consumer access to affordable, home grown, clean burning biofuel today, tomorrow and we also hope for many years to come. thank you. i will yield back. >> thanks, senator. again, thanks for your attendance, thanks for your patience and your questions and comments. several members and witnesses have asserted that the increase of gasoline at the pump is attributable to crude oil prices. i asked my staff, i said, let's actually look at the numbers. if you go back to february 2021, the price of oil at the pump was $62.28. the price today is $94 per barrel. that's an increase of about 51%.
3:59 pm
so, those are interesting numbers. all right. i've got a couple of questions. senator capito may have some wrap-up questions as well. senator wicker, are you out there anywhere? no. not going to be able to come. okay, thanks. a couple of questions. the first one i'd like to ask is, ms. wind, with respect to eligible fuels, unlike the renewable fuel standard which requires it to be derived from renewal sources, carbon fuel standard programs like oregon's are generally intended to be both fuel neutral and technology neutral. with this in mind the oregon
4:00 pm
clean fuel program has a broader definition of transportation fuels than the federal renewable fuel standard. my question is how has this broader definition of transportation fuels benefitted the oregon program and encouraged investment in producing cleaner fuels in your state? >> thank you for that question. so it is true. in the state of oregon with the low carbon fuel standard, we do basically value any of the transportation fuels that are lower carbon than gas and diesel. in addition to the biofuels and electricity, we also have renewable natural gas, we have propane and renewable propane and we're going to be investing more in hydrogen as well. what we'd like to see is even with natural gas and with propane that we switch from the fossil versions to the renewable versions but even the switch from fossil gasoline or diesel there are benefits from the propane and the natural gas. if those are the fuels that because of the lower cost of
4:01 pm
those fuels are what is leading to more infrastructure and more vehicles and alternative fuel space and then switching to the renewable versions lowered the carbon intensity even more. those are the kind of things we also see in the state of oregon and we'll likely continue to see as we move into the future for the oregon clean fuels program. >> okay. i have a follow-up question to ms. skor. with restrictions on what qualifies as an advanced fuel under renewable fuel standards could a technology neutral program like oregon's clean fuels program allow more opportunity for your member companies to participate than the current structure of the renewable fuel standard? >> thank you for the question. yes, we are a low carbon fuel. we do very much appreciate the concept of a low carbon fuel
4:02 pm
standard. importantly, as you stated, senator, making sure that this is technology neutral. this is where the carbon modeling comes into play. we've got to make sure you are evaluating all of the life cycles. that you are considering all of the low carbon farming practices that bring down the carbon intensity of our fuel. if you have a program that is truly technology neutral that reflects the current state of the art science and innovation take place throughout industry that allows for use of higher biofuel blends like an e-15, that's a place we can play and i think we'll be able to really help in terms of achieving some of our low carbon goals. i will add that's very complimentary to the rfs so the two programs work well in tandem. i think miss wynn talked about the value stack to continue making sure that the lowest of
4:03 pm
the low would go into a market like oregon. >> i've got two more quick questions then i'm going to yield to senator capito. this is a question for the entire panel. i would ask -- i'd ask -- let me say i appreciate the perspectives, i think we all do, the perspectives that our panel has shared with us today. i want to compliment our staffs for pulling you all together. thank you for joining us in person and remotely. i hope this dialogue can help inform thoughtful action to support the future of this important program. with that said, i also recognize the challenges in forging the path forward for the renewable fuel standard that satisfied everyone and the potential need for compromise and collaboration. in closing, take half a minute to tell us where you believe there might be common ground for all of us on this panel as we deliberate this issue going forward.
4:04 pm
and we will. ms. skor, would you like to go first. >> i heard a lot of consensus about the importance of competition and marketplace certainty and consumer choice as we make sure we drive toward low carbon fuel options for consumers that are affordable and available. this is a place where biofuel has a role to play. what we need is a renewable fuel standard that is enforced so there is some certainty and those making business decisions throughout the supply chain, including agriculture biofuel and on the refining side so we understand what the obligations or and we bring down that volatility. we look forward to seeing the epa fix and finalize the blending obligations for 2021 and 2022 as expeditiously as possible. that certainty is going to be something that is going to be good for all parties. >> senator, do you have one more question? >> thank you, mr. chair. just very briefly because i
4:05 pm
think i've got most of the answers for my questions. but i would like ms. skor, emily, would you respond about the -- just give a statement or thoughts on the anti-ethanol study that was done earlier this week. >> i appreciate the comment. yes, i'm familiar with that. it's really concerning when you look at the manipulation of the science and data, the unorthodox methodology that leads to fictitious and erroneous conclusions. in short you've got a piece of work that's untethered from reality. you look at the totality of science and consensus of the epa. california air resources board, oregon's department of environmental quality and of course many scientists. ethanol is lower carbon than gasoline and that advantage continues to increase. >> thank you. thank you, mr. chair. >> senator capito has one last question. then i'm going to ask the reminder of my time to go to
4:06 pm
three of our witnesses then we'll wrap. >> thank you, mr. chairman. i have to run really quick after i just make a comment or two. i think it's been a very interesting hearing. i think there is consensus that there's a lack of certainty. maybe certainty in different areas, that you might share different areas that don't have certainty, but you're looking to us to provide some of the certainty so that epa can move forward. in my view, nothing screams lack of certainty than having an exemption that is then revoked two years later. i mean, that to me is just unconscionable no matter if it was a corn producer, refiner, coal miner, anything, an ev car maker. if you have the okay and it says you're going to have the permit to move forward, how can you possibly conduct business if somebody's going to come back two years later and revoke it? that to me is lack of certainty. i do have the study here that
4:07 pm
shows from the university of wisconsin that u.s. corn based ethanol is worse for the climate. i'm not going to argue that. i don't know. i think that we need to get what is a life cycle, when does it start, how long does it go, what kind of emissions are included in producing ethanol from corn or growing corn or getting crude out of the ground. i think we need to have some consistency here and certainty here that we're using the same measurement data because i think it confuses the american public quite frankly and many of us here who are making those decisions. i want to thank you, mr. chairman. i don't really have a question. i just thank the witnesses for being before us and i thought our members asked some really good questions. >> this has been valuable. this committee is pretty good at finding the middle in complex difficult issues, unanimously in some cases and this is a hard one. we look forward to working with your team and others on this
4:08 pm
committee in trying to find a path forward going forward. i'd like to say if it isn't perfect, make it better. the situation isn't a perfect situation. we've got to do better than this. thank you. i'm going to go back to our panel again. i ask a common ground question. i'd ask each of you to take a minute where you believe there's common ground among all of you. i think only ms. skor had the opportunity to respond. let me ask our other witnesses if they would respond as well. ms. wind, why don't you go first. >> thank you for the question. >> common ground. >> yes, common ground. i think i would echo what ms. skor and ranking member capito have mentioned, uncertainty. it is something that we hear quite a bit from the stakeholders that participate in the oregon clean fuels program
4:09 pm
and the market. certainty as far as regulatory certainty, as far as the standards being established for our program, that is why we are undertaking our current program to expand those programs out to 2025 in provide that certainty. transparency in what we do, you know, in the way that we do our life cycle accounting and the information that is used to establish those carbon intensities as well as the market aspects of our program, the credit pricing and the transactions for that. it is something that is the pillars of how we implement the program in oregon and i think has served us really well. >> thank you, ma'am. >> thank you, mr. chairman. i was thinking one of the problems is maybe we should try to do a better job at getting a
4:10 pm
common set of facts so that we can -- >> sometimes that helps. >> sometimes that helps. one of the things i'd like to ask the committee to do is let's have the energy information agency publish data for us on what the fob export price of gasoline is and what the wholesale domestic price of gasoline is. let's have them break down the components because there's a lot of discussion crude oil is causing the price of gasoline it to go up. of course it is, but there are other problems. we might get a sense of where are the hot spots beyond crude oil driving up gasoline prices. >> thank you for that suggestion. ms. coe, same question. >> i think common ground is that small refineries do not oppose biofuels. biofuels that are lower emitting are not a problem. where we depart is on the ability of everybody to share
4:11 pm
and the ability to blend or pay reasonably high rin prices. i would say we have commonality in wanting lower emitting biofuels. i think where we depart on that point also is on whether or not ethanol is, in fact, a lower emitting fuel. as we've been talking about the recent studies suggest that ethanol could be 24% higher emitting of greenhouse gas emissions than petroleum based fuels. so to his point, information is key. senator ernst explained that blending is a choice. it is not a choice when you don't have access to biofuels. so i think the eia could help us enormously by instead of resisting freedom of information act requests related to how much is each refinery paying to buy rins, what is each refinery's actual cost of compliance.
4:12 pm
we understand that sufficient rins are available for compliance but not in the hands necessarily of the people who need them for compliance. whose hands are they in? so more forthcoming data would certainly help to dispel some of the disagreements. so i think that would be important. there are substantial barriers to blending which i agree with ms. skor, there are. i think we disagree as to what those barriers are. but there are substantial barriers. we have to have a change to the renewable fuel standard if we want it to be sensible, if we want it to not distort competition, and if we want to bring down the price of gasoline and diesel. >> thank you. i have a real quick question for ms. skor and i'll ask you to be very brief in your response because we have a vote under way and i don't want to miss that vote. it's my understanding that the previous administration significantly increased the number of small refinery waivers
4:13 pm
compared to the obama administration, including issuing waivers for refineries owned by integrated companies like exxonmobil. is that your understanding? >> that's correct, mr. chairman. in the previous administration, epa increased the number of small refinery exemptions by a factor of six. that was a sixfold increase over 80 small refinery exemptions resulted in 4 billion gallons of demand destruction. without any transparency in the theme of information as to how it is that they determined that those particular refiners met the very narrow threshold, that is you've got to demonstrate disproportionate economic harm as a result of rfs compliance. so we are pleased to see that this epa is taking a different approach and looking to follow the law and the narrow scope of that relief avenue which is available. >> thank you for that response. well, in closing, let me just
4:14 pm
say we've had great participation here, certainly from the witnesses, but also from the members in person and remotely. i'm grateful for all that. grateful to our staffs for pulling together a great panel. and this is not an easy issue. it's the first time we've had a hearing on it in like six years and it's long overdue. it's been helpful for me and i hope it's been helpful for some of my colleagues. we've raised as many issues and questions as we've answered but it's a good start. again, how much of this committee as we work together and work across party lines and we try to get to yes as often as we can and find consensus. but i want to thank you all for joining us. renewable fuel helps safeguard a nation's energy, security, boost economic opportunity for our farmers and reduce greenhouse gas emissions. i look forward to continuing our conversation and working with members of our committee, our colleagues in the senate and other stakeholders to improve the renewable fuel standard program. as we look to the future of the
4:15 pm
program, i believe we can encourage even greater sustainability for the fuels that empower our lives. before we adjourn, some housekeeping. senators will be allowed to submit written questions for the record through the close of business on wednesday, march 2nd. we'll compile those questions, panel, and send them to you. we'll ask you to respond, if you will, by wednesday, march 16th. with that, this hearing is adjourned. thank you all.
4:16 pm
4:17 pm
c-span is your unfiltered view of government. we're funded by these television companies and more, including comcast. >> you think this is just a community sensor? no. it's way more than that. comcast is partnering with a thousand community centers to create wi-fi-enabled places so students from low income families can get the tools they need to be ready for anything. >> comcast supports c-span as a public service, along with these other television providers, giving you a front row seat to democracy. with the recent increase in fuel prices, the house energy
4:18 pm
and commerce committee hears testimony from oil company executives about their business practices and the fossil fuel industry's role. we'll hear from the leaders of bp, chevron, devon energy, exxonmobil, pioneer natural resources and shell. watch live wednesday at 10:30 a.m. eastern on c-span 3 or watch on c-span now, our live video app. the chief of the u.s. forest service, randy moore, testified on reducing the risk of wildfires before a house oversight and reform subcommittee. the hearing also included a second panel on forest management with carol king.


info Stream Only

Uploaded by TV Archive on