Is Obama Doing Inhofe's Dirty Work on Biofuels?

"America is now a global leader when it comes to taking serious action to fight climate change. And, frankly, approving this project would have undercut that global leadership."

Such was the reasoning offered by President Barack Obama on November 6 when he rejected a request from TransCanada, a Canadian company, to construct the Keystone XL oil pipeline, which would have stretched 1,179 miles from Canada through Nebraska to the Gulf Coast and carried more than 800,000 barrels a day from the oil fields in Alberta to the refineries in Texas. In the seven years it was debated within the Obama administration, the pipeline became a touchstone issue. As a result, the action Obama took on Keystone would represent his position on climate issues as a whole.

"That's the biggest risk we face -- not acting," Obama said. "Today, we're continuing to lead by example. Because ultimately, if we're going to prevent large parts of this earth from becoming not only inhospitable but uninhabitable in our lifetimes, we're going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky."

It's ironic, then, that even as Obama extolls the virtue of keeping fossil fuels in the ground, his administration is in the process of gutting the Renewable Fuel Standard, the most significant piece of legislation passed over the past decade to do just that -- reduce oil consumption in the United States and keep fossil fuels in the ground. Created by the U.S. Congress in 2005 and strengthened in 2007, the RFS ordered oil companies to blend increasing amounts of renewable fuels -- mostly ethanol -- into the nation's transportation fuel supply. Starting with nine billion barrels of renewable fuel in 2008, the amount would increase each year until it reached 36 billion by 2022.

George W. Bush signed the bill into law, and Obama supported the RFS during his first term. But in November 2013 his administration stunned the renewable fuel industry when the Environmental Protection Agency announced plans to make significant changes to the RFS that would weaken it if not end it outright. Claiming "[b]iofuels are a key part of the Obama administration's 'all of the above' energy strategy," EPA administrator Gina McCarthy nevertheless revealed that her agency would propose a reduction in the amount of biofuel required to be blended by four to five billion gallons a year -- a annual decrease of 15 to 20 percent, starting in 2014.

Even more disturbing, in its announcement, the EPA appeared to acknowledge for the first time the existence of a so-called "blend wall." "Nearly all gasoline sold in the U.S. is now 'E10,' which is fuel with up to 10 percent ethanol," the EPA said in a statement accompanying McCarthy's remarks. "Production of renewable fuels has been growing rapidly in recent years. At the same time, advances in vehicle fuel economy and other economic factors have pushed gasoline consumption far lower than what was expected when Congress passed the RFS in 2007. As a result, we are now at the 'E10 blend wall,' the point at which the E10 fuel pool is saturated with ethanol." As such, the EPA was willing to consider a distribution waiver "to help overcome current market challenges."

Actually, one of Obama's own departments contradicted the EPA's assertion that an E10 blend wall exists. According to the Energy Information Administration, 22 states as well as the District of Columbia reported that in 2013 ethanol consumption in their states passed 10 percent. From California to New Hampshire, Wisconsin to Louisiana, the states did not identify any problems using blends over 10 percent. Indeed, in Minnesota, the average blend contained 12.2 percent ethanol.

By taking this new position, however, the Obama administration aligned itself with an unlikely ally -- Senator James Inhofe of Oklahoma. One of Washington's most outspoken proponents of fossil fuel, Inhofe is so skeptical of climate change he published a book entitled The Greatest Hoax: How the Global Warming Conspiracy Threatens Your Future. In a radio interview to promote the book, Inhofe revealed the inspiration that caused him to take his position on climate change -- the Bible. "God's still up there," Inhofe said. "The arrogance of people to think that we, human beings, would be able to change what He is doing in the climate is to me outrageous."

When the RFS was originally drawn up in 2005, two waivers -- for severe harm to the economy or the environment and for inadequate domestic supply -- were included that would allow the EPA to alter the law's requirements. Inhofe attempted to insert language that would allow a waiver for "distribution capacity," meaning RFS requirements could be changed if the industry reached its capacity to distribute renewable fuels. Since the nation's distribution system -- that is to say, the gasoline stations -- is owned for the most part by oil companies, proponents of the RFS argued Inhofe's "distribution waiver" would amount to the oil industry determining the fate of the RFS. As a result, Inhofe's language was cut from the bill while it was in committee.

Still, when the EPA issued its official proposal for RFS reform in May 2015 following a year-and-a-half delay -- it must be finalized by November 30 -- it contained language that echoed Inhofe's "distribution capacity" waiver. "[T]he limited number and geographic distribution of retail stations that offer higher ethanol blends such as E15 and E85, the number of [flex-fuel vehicles] that have access to E85, as well as other market factors" -- all factors having to do with distribution -- "combine to place significant restrictions on the volume of ethanol that can be supplied to vehicles at the present time." The EPA used this justification to weaken the RFS.

Why would the Obama administration adopt a position first proposed by Inhofe, the recipient of substantial funding from oil companies and Charles and David Koch? After taking office, Obama was lobbied by the oil industry to weaken or repeal the RFS -- at first with no success. But eventually the RFS was modified, after which key advisors to the president left his administration to assume positions affiliated with Big Oil. To show just how overwhelming the influence of Big Oil is in Washington, consider a recent letter sent to Gina McCarthy and signed by 180 members of Congress. The letter argued that because the industry had reached the ethanol blend wall the RFS should be altered. It was no accident the concerns stated by these lawmakers sounded as if they could have come from the oil companies themselves. As Bloomberg reported: "The echo in the letter wasn't a coincidence: A lobbyist for refiner Marathon Petroleum Corp. was listed as an author of early drafts of what was distributed to lawmakers for them to sign on."

Why are the EPA's proposed changes to the RFS important? Because they could be the death knell for the RFS. The oil industry controls gasoline distribution. Once the EPA allows the industry to make decisions about the RFS for distribution reasons, the oil industry is effectively dictating to the government how the law should be enforced. Naturally, Big Oil will interpret the law in the way that most benefits Big Oil. If the blend wall is used to weaken the RFS, it is only a matter of time until the oil companies move to repeal it altogether.

Obama's decision to modify the RFS could not come at a worse time. One wonders if the issue will be brought up when the president travels to Paris at the end of November to participate in the United Nations Conference on Climate Change. After all, as he lectures world leaders on the urgency of addressing global warming, his own administration is gutting the RFS, the very type of legislation countries should adopt to reduce the greenhouse gas emissions that cause climate change.