House Lawmakers Say Renewable-Fuel Mandate Will Change

Republican and Democratic U.S. lawmakers said legislative changes probably will be made to the Renewable Fuel Standard while a repeal of the quotas as demanded by refiners is unlikely.

“We have some issues we need to address,” Representative John Shimkus, Illinois Republican, said today at a committee hearing on the program. “You don’t have enough for repeal. You do have enough for reform.”

Under the federal law, refiners such as Exxon Mobil Corp. (XOM) and Valero Energy Corp. (VLO) must use a certain amount of renewable fuels each year, or buy credits, called Renewable Identification Numbers, to meet their production quotas. The cost of those RINs jumped to a record last week on concerns that total renewable fuel will fall short of meeting the mandate.

Refiners say that increasing mandates for ethanol’s use coupled with flat overall fuel demand means they will need to increase the blend of ethanol in gasoline beyond 10 percent, the level deemed safe for all vehicles. Production of next-generation fuels made from wood waste, algae or used kitchen grease haven’t kept pace with the forecasts issued by supporters when the measure passed in 2007.

Shimkus and lawmakers such as Representative Gene Green, a Texas Democrat, complained today that industry representatives at a hearing held to entrenched positions, with ethanol producers saying the current program needs no changes from Congress, while refiners argued that complete repeal is needed.

“It’s been frustrating to have the same old” arguments, said Representative Lee Terry, a Nebraska Republican.

Lawmakers from both political parties discussed what efforts could be made to spur production of low-carbon, advanced renewable fuels, while ethanol made from corn, which makes up the overwhelming share of these non-oil fuel sales, faced criticism for boosting food prices and not cutting greenhouse-gas emissions.

“Corn-based ethanol is problematic,” Democratic Representative Kathy Castor of Florida said at the hearing.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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