US Senator's biofuels reform faces stiff opposition

A plan by Texas Senator John Cornyn to revise US biofuels policy is facing strong resistance from the oil and ethanol sectors, Reuters reported this week, quoting sources familiar with the matter.

The plan follows nearly two years of negotiations with the ethanol and corn lobbies to agree an end to their bitter battle over the future of the Renewable Fuel Standard, which requires refiners to meet the costs of mixing increasing volumes of biofuels, such corn-based ethanol, into US fuel supply.

Refiners are required to do this by acquiring blending credits known as RINs, which are either bought or earned through blending at source.

According to Reuters, the main element of Cornyn's plan is to create of a new type of ethanol RIN credit to be known as a D8 RIN, which would be generated when a gallon of gasoline containing more than 10% ethanol is produced. 

The existing pool of D6 RINs would cover only gasoline that has a percentage of ethanol below 10%, which would representing the vast majority of the fuel sold in the country, the story added. 

By separating the two types of fuel, the senator reckons that D6 RIN prices would fall sharply, and thus save refiners money. 

Meanwhile, the higher-blend D8 credits would cover a smaller portion of the market but would fetch a premium and at the same time preserve the incentive for companies to invest in more ethanol blending infrastructure, the article added, citing sources. 

Cornyn's plan would require the acquiescence from pro-ethanol lawmakers, such as Republican Senators Chuck Grassley and Joni Ernst of Iowa, but they have previously expressed their intention to block revisions to the RFS.