The Challenge of Meeting Demands of Renewable Fuels Standard

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The Challenge of Meeting Demands of Renewable Fuels Standard


WASHINGTON -- John Eichberger, NACS vice president of government relations, is testifying today on behalf of the industry regarding the challenges facing the retail motor fuels market as it tries to accommodate the demands set forth in the Renewable Fuels Standard (RFS). The hearing is taking place in the Senate Committee on Energy and Natural Resources, which is chaired by Senator Jeff Bingaman (D-NM).

The purpose of the hearing is to review Department of Energy biofuel programs and biofuel infrastructure issues and to consider a bill, S. 187, the Biofuels Market Expansion Act of 2011. The bill seeks to require production of additional flexible fuel vehicles that can run on anything from E0 to E85.

In his testimony, Eichberger will highlight the fact that retailers are committed to complying with the current laws and regulations and to provide their customers with the best products and services they can offer. However, he will also point out that there are many challenges the retail industry faces when considering whether to sell a new fuel and these challenges must be overcome if the goals of the RFS are to be realized.

"NACS encourages Congress to consider proposals that will allow retailers to have existing equipment evaluated and certified as compatible with new fuels, that protect market participants from liability in the event of consumers misfueling, and that promote development of new fuel products that are more compatible with existing vehicles and infrastructure," according to a draft of Eichberger's testimony provided to the media in advance.

Eichberger points out that the industry is concerned about specifically dictating the "fuel of the future," since new technologies could bring about better fuel products that are more suitable to the nation's objectives and require less investment in infrastructure modifications.

"This transition to a new fuel market is unique in the fact that it is not backwards compatible and consumers are not required to buy the new fuel," according to Eichberger, who will also present NACS' recommendations to accomplish the objectives of the RFS:

• Provide retailers with a mechanism to have existing storage and dispensing equipment evaluated to determine if they are technically compatible with new fuels and, if so, provide legal authority to use that equipment to sell new fuels. This will potentially save the industry, and consumers, billions in unnecessary investments.
• Provide retailers with labeling requirements for new fuels that educate and inform consumers about the authorized uses of new fuels. Ensure that compliance with such requirements will satisfy a retailer's requirements under the Clean Air Act and protect them from violations or engine warranty claims in the event a self-service customer ignores the notifications and misfuels a non-authorized engine.
• Provide market participants with regulatory and legal certainty that compliance with current applicable laws and regulations concerning the manufacture, distribution, storage and sale of new fuels will protect them from retroactive liability should the laws and regulations change at some time in the future.
• Encourage and facilitate the production and conversion of flexible fuel vehicles, thereby increasing the potential market demand for higher blends of ethanol fuels and creating a more attractive market for retailers to offer such fuels.
• Evaluate the prospects for marketing of infrastructure-compatible fuels and support the development of such fuels. These could aid compliance with the RFS and save retailers, engine makers and consumers billions of dollars. Policymakers might consider establishing characteristics that new fuels must possess so that equipment and engines can be manufactured or retrofitted to accommodate whichever new fuel provides the greatest benefit to consumers and the economy.
• Refrain from pre-selecting the "fuel of the future" and allow the market to determine the product that will most benefit consumers and the economy. To pre-select a winner based upon current available technologies will undermine innovation and prevent the market from developing a better option that may not be apparent to policymakers.

Other witnesses at the hearing include:

• U.S. Senator Tom Harkin
• Bill Brady, CEO of Mascoma Corp.
• Shane Karr, vice president for federal affairs at the Alliance of Automobile Manufacturers
• Bob Dinneen, president & CEO of the Renewable Fuels Association
• Dr. Henry Kelly, acting assistant secretary of the U.S. Department of Energy