WASHINGTON, Mar. 8, 2017 - What a difference a week makes.
Early last week, rumors swirled about a purported deal between Carl Icahn, a policy advisor for President Trump who also has ownership in a refinery, and the Renewable Fuels Association that would change the point of obligation under the Renewable Fuel Standard in exchange for a regulatory fix that would allow for year-round sale of E15. Reaction from pretty much every group other than RFA was heated, with the renewable fuel coalition, Fuels America, eventually severing ties with RFA.
Now, the industry is working to present a united front just days after appearing so bitterly divided.
Growth Energy CEO Emily Skor and RFA CEO Bob Dinneen met on the sidelines of Commodity Classic last week in San Antonio. Speaking to Agri-Pulse, Skor declined to go into specifics about what was covered, but said the conversation was part of making sure the groups are back to being on the same page.
“At the end of the day, we really do need to remain united in our commitments to protect the Renewable Fuel Standard,” she said, “and make sure that we don’t have fundamental changes like what was suggested last week.”
“What’s most important for me is that our dialogue is inclusive and not exclusionary,” Skor continued. “My big concern with the news events of last week was that there were some sidebar conversations happening between two individuals who seemed to believe perhaps that they could speak on behalf of much broader audiences than they really could. If the biofuels industry has a position, we should present it transparently and in a very united fashion to the federal government.”
Calls for unity are in contrast to the statement Growth Energy released last week, in which Skor said Icahn and RFA were “negotiating for the same side” due to the fact that RFA’s largest member, Valero Renewable Fuels Company, is a subsidiary of Valero Energy Corp.
For his part, Dinneen continued to defend his actions last week, even after the White House denied that any such deal was in the works. Speaking on AgriTalk, Dinneen said the renewable fuels industry would be “practicing malpractice if we didn’t pursue these kinds of opportunities.”
“Carl Icahn is going to be a force to be reckoned with on this issue,” Dinneen said, noting that the point of obligation issue may come back again. “Maybe it doesn’t happen; maybe he doesn’t have the stroke to get it done. What have we lost in trying to make sure that if it does happen, that we get something for it?”
The outcome Dinneen was pursuing – a waiver for Reid vapor pressure (a measure of the volatility of gasoline) that would allow for the sale of E15 in the summer months – is widely supported in the sector. But groups were upset at the approach Dinneen is defending.
“If you trade point of obligation for Reid vapor pressure (RVP), I can’t think of a worse deal,” Skor said. “Doing that is like saying to the retailer, ‘Okay, you finally have the ability to sell E15 in the summer months, but we are now taking away any economic incentive you have to do so.’ So you’ve neutralized yourself. You’ve actually accomplished nothing for biofuels.”
Another industry lobbyist who asked not to be identified told Agri-Pulse that RFA’s approach “burned every bridge they have on Capitol Hill” because playing a part in an alleged deal would have altered part of the RFS could make it more difficult to oppose future legislative changes.
A group of lawmakers have also introduced legislation to address the RVP issue, much to the delight of stakeholders opposed to pursuing the change through the rumored deal involving Dinneen and Icahn.
But Dinneen says those critical of the alleged pact are misunderstanding it. He told reporters point of obligation enforcement would jump from about 200 parties today to maybe 250, but stressed that’s “an estimate, and that’s going to be one of the details that I want the devil to show me.” He also took issue with assumptions that he was agreeing to a change that would undermine the RFS.
“The RFS is my singular achievement in 30 years working for this industry,” he said on AgriTalk. “If anybody out there believes that I would for one second do anything to undermine the effectiveness of the program, they’re out of their minds.”
While public comments point to a lingering disagreement on this deal, the industry may have to buckle up for another fight against legislative changes to the program. House Agriculture Committee Chair Mike Conaway, R-Texas, made comments leaning in that direction, and Rep. John Shimkus, an Illinois Republican who chairs the House Environment Subcommittee, said he wants to see RFS reform taken up by the House Energy and Commerce Committee this year.
While RFS reform efforts on Capitol Hill are nothing new, Skor says the industry needs to re-collect itself after the events of the last week to ensure the affected groups can go to Capitol Hill with one voice.
“We have quite a challenge ahead of ourselves, in terms of dealing with (last week’s news), but our hair isn’t on fire,” she said. “We’ve got some time to take our breath, to regroup as an industry, to have all of the important conversations that we need to have together to make sure that we’re aligned and that we’re transparent and good partners and honest brokers, and I think we can get there.”