Energy Marketers of America weekly update on important national industry news

October 18, 2024

Urge Congress to Extend the Biodiesel Blender’s Tax Credit

Recently, Representatives Mike Carey (R-OH), Claudia Tenney (R-NY), Annie Kuster (D-NH) and Mariannette Miller-Meeks (R-IA) introduced the “Biodiesel Tax Credit Extension Act of 2024,” (H.R. 9060), which aims to extend the $1 per gallon biodiesel blender’s tax credit through 2025. Extending the biodiesel blender’s tax credit is important to energy marketers in order to sell a growing portfolio of affordable, efficient, and environmentally friendly liquid fuels that are helping to reduce emissions while propelling Americans forward and lowering heating fuel costs.

Since 2004, the $1 per gallon biodiesel blender's credit has worked successfully to build a strong incentive for downstream energy marketers to blend renewable fuel into the fuel supply which has lowered prices for motorists and heating fuels for consumers. As a result, the U.S. biodiesel and renewable diesel market has grown from roughly 100 million gallons in 2005 to 4 billion gallons today.

Unfortunately, the Inflation Reduction Act (IRA), which was signed into law in 2022, replaced the biodiesel blender’s tax credit with a new 45Z Clean Fuel Production Credit (CFPC) based on carbon intensity scores. Ethanol, biodiesel, renewable diesel and sustainable aviation fuel (SAF) will all be eligible for the new production tax credit, however, the Department of the Treasury has yet to publish CFPC guidance. Therefore, it is important that Congress acts soon to extend the biodiesel blender’s tax credit to give impacted industries market certainty for at least another year. Depending on the outcome of the November elections, a GOP controlled Congress could reevaluate much of the IRA’s tax credits so stay tuned.

• Heating fuels marketers -- click here to write Congress to extend the Biodiesel Blender’s Tax Credit.
• Motor fuels marketers -- click here to write Congress to extend the Biodiesel Blender’s Tax Credit.

Energy Marketers of America Challenges EPA’s Heavy Duty Vehicle Electrification Mandate

The Energy Marketers of America (EMA) this week filed its opening brief in a D.C. Circuit Court of Appeals lawsuit challenging the U.S. Environmental Protection Agency’s (EPA) heavy-duty (HD) vehicle emissions standards for model years (MY) 2027-2032.

Recent polling suggests that Americans overwhelming oppose the Biden-Harris Adminstration’s electrification mandates. Despite public opposition, the administration continues advancing these policies through the rulemaking process without congressional authorization, undermining consumer choice and causing skyrocketing utility bills. 

“Unfortunately, President Biden’s aggressive attempt to electrify the heavy-duty transportation sector will limit consumer choice on cleaner, greener ICEs, increase Americans’ utility bills to subsidize a massive expansion of the electric grid for EV charging, and threaten the viability and jobs of small business energy marketers around the country, whether they deliver gasoline, diesel or renewable fuels like ethanol, biodiesel and renewable diesel,” said EMA President Rob Underwood.

Today, heavy duty vehicles make up just one tenth of one percent of all heavy vehicles. Unfortunately, the Biden-Harris EPA wants to arbitrarily increase that figure exponentially over the next seven years. Under the rule challenged by EMA, electric trucks would make up 45 percent of all heavy-duty vehicles sold by 2032. According to EMA’s brief, the rule’s electrification of the Nation’s trucking fleet involves a major policy question that must be decided by Congress. Accordingly, the rule is lawful only if Congress clearly authorized EPA to suppress the production of internal-combustion vehicles in favor of electric ones. No statute gives EPA that highly consequential power, and EPA has never claimed the power to require companies to sell electric heavy-duty vehicles. This forced transition to electric trucks will increase transportation costs, hike prices for basic goods, and strain the electric grid. It will also increase the cost of procuring the trucks that State Plaintiffs challenging the rule need to carry out essential state services like plowing snow and repairing roads. EMA is urging the Court to reverse EPA’s rule.

Additional Legal Challenges Playing Out
EMA is part of business groups and States who have already asked the courts to review EPA’s prior tailpipe emissions standards for model year 2025 and 2026 vehicles and the Agency’s reinstatement of California’s Clean Air Act waiver to issue climate-based vehicle emissions standards. Whether California can blaze its own trail on combatting climate change also implicates the “major questions doctrine,” which holds that courts should not defer to agencies on questions of “vast economic or political significance” unless Congress has provided explicit authority to the agencies. The appeals court will be asked to decide whether Congress authorized California in the Clean Air Act to regulate vehicle emissions to target a major, global phenomenon with vast economic and policy repercussions like climate change. Additionally, EMA joined as amicus curiae challenge to the National Highway Traffic Safety Administration’s fuel-economy standards. Check out www.fuelmatters.org for more information about clean, green liquid fuels and the electrification mandate.

Department of Energy Announces No Changes to Minimum AFUE Ratings for Oil Fired Furnaces

The U.S. Department of Energy announced it will not amend existing minimum Annual Fuel Utilization Efficiency (AFUE) energy conservation standards for consumer weatherized oil-fired furnaces (WOF), non-weatherized oil fired furnaces (NWOF) and mobile home oil fired furnaces (MHOF). AFUE is a percentage that measures how much of a furnace's fuel is used to heat a home. The current minimum AFUE rating for WOF furnaces is 78 percent while the minimum AFUE rating for NWOF furnaces is 83 percent. The DOE’s Office of Energy Efficiency and Renewable Energy made the announcement in Notice of Final Determination,released earlier this week.

The announcement is good news for heating fuel dealers because more stringent AFUE ratings would further constrict the already small and shrinking market for NWOF and WOF furnaces. The DOE is required under the Energy Policy and Conservation Act (EPCA 42 U.S.C. 6295(m)(1)) to review established AFUE ratings every six years to determine whether more-stringent standards would be technologically feasible, economically justified, and result in significant energy savings. The DOE Notice of Final Determination found that given the small market share of NWOF and WOF furnaces, more stringent minimum AFUE standards, while technologically feasible, would not result in any significant energy savings as required by law. The Notice of Final Determination also maintains the current minimum AFUE standards for weatherized gas furnaces and electric furnaces.

DOE’s Winter Fuel Outlook Predicts Five Percent Drop in Heating Cost for Oil Heat This Winter

The DOE predicts that most U.S. households will spend about the same or less on energy than they did last winter, depending on a household’s main space heating fuel and the region where they live. Generally, retail energy prices in the DOE’s Winter Fuel Outlook are lower than they were last winter, but temperatures across much of the country are set to be colder this year, meaning homes will use more energy for space heating. Heating energy costs for homeowners will be less than last year for heating oil. The DOE is predicting it will cost 5 percent less to heat with heating oil compared to last year. Heating with propane will be the same as last year while heating with natural gas will increase by 1% over last year.

Meanwhile, heating with electricity will cost consumers 2 percent more than last year. EIA projects total heating costs for the Northeast in the base case scenario as follows: natural gas $772; electricity $1391; propane $1674; heating oil $1410. According to the EIA, these costs could go up or down depending on colder or warmer winter weather than used in its predicted weather baseline.

EMA Submits Comments Supporting FDA’s Efforts to Crack Down on Illegal Vaping Products

This week, the Energy Marketers of America filed comments supporting FDA’s proposed rule requiring Submission Tracking Numbers (STNs) be submitted in the Automated Commercial Environment (ACE) at the time of entry for Electronic Nicotine Delivery Systems (ENDS) being imported or offered for import into the U.S. Unfortunately, the limited enforcement actions have allowed illicit market actors to expand beyond ENDS to other tobacco and nicotine categories. EMA urged the FDA to finalize a Foreign Manufacturer Registration rule; increase the scope of import alerts for detention without physical examination; increase the number of field examinations at ports of entry with high ENDS import volume; and increase the number of random joint inspections with Customs and Border Protection (CBP). 

Click here to read the letter.

EMA Votes to Maintain 85 Octane in U.S. Mountain Region

The ASTM D02 committee is considering a proposal to remove existing text in Appendix X1 of D4814-24 Standard Specification for Automotive Spark-Ignition Engine Fuel related to the effects of altitude and weather on vehicle antiknock requirements. The task force proposing this revision has determined that the information presented in this appendix is no longer relevant due to the prevalence of antiknock reduction control technology in most vehicles produced after 1984. No data, however, has been presented to dispute the altitude adjustment for octane requirement discussed in the appendix. 

EMA does not agree that the information related to effects of altitude and weather on vehicle antiknock requirements is no longer relevant information in the standard and has voted negative on the recent ballot for this revision. The information presented in this appendix continues to be relevant to vehicles without sophisticated control technology (mostly pre-1984 vehicles) as well as other engines that still do not have modern fuel systems. Altitude has a direct effect on air temperature and pressure, both of which affect gasoline engine performance, and regardless of whether there are knock sensors the discussion regarding the effects of altitude on vehicle antiknock requirements in the appendix is still relevant for 1984 and later vehicles.

Further, this proposed modification could impact the supply of 85 AKI fuel that consumers have continued to choose after considering the tradeoffs of engine performance, owner’s manual recommendations, driving habits and cost. While the ballot doesn't exactly remove the altitude allowance in high altitude areas, it does remove some of the foundational language that supports the allowance. Retention of this information does not negatively impact this standard and supports the ability to continue to provide 85 AKI fuel.

Weekend Reads

Democrats Run away from Damaging Electric-Vehicle Push with Michigan up for Grabs | National Review

Phillips 66 to shut oil refinery, end gasoline output in Los Angeles | Reuters

Will Biden’s EV mandate help Republicans flip Michigan? | Apple Podcasts

Behind the Curtain — Election scenario 3: Trump with Dem restraint | AXIOS

Behind the Curtain — Election scenario 4: Harris with handcuffs | AXIOS

Behind the Curtain: America's shocking agreement | AXIOS

Gavin Newsom signs bill to prevent fuel shortages and price spikes: What to know (thehill.com)

Federated Insurance: Risk Management Corner
Consistency is Key for Fire Prevention

With October being National Fire Prevention Month, Federated Insurance is reminding our clients, your members, that consistency is key to keeping businesses flame-free.

Did you know that 90% of businesses fail after a major fire¹? With this in mind, business owners are encouraged to take regular and frequent action to safeguard their businesses against fire risks by conducting regular business walkthroughs and utilizing fire safety checklists.

• Fight Fire with Fire … Prevention: Download a complimentary Fire Safety Checklist to be used routinely to identify potential fire hazards within your business.

Thank you for helping prevent a deadly and devastating fire at your business.

1. Source: National Fire Protection Association (NFPA), “Fire Loss in the United States During 2020.” Accessed 9/16/24.

Please always feel free to contact your Federated regional representative or EMA’s new National Account Executive Patrick Cunningham at 507.455.8935 for any additional information or risk management questions. Federated is a Partner in EMA’s Board of Directors Council.

At Federated Insurance, It’s Our Business to Protect Yours®

This article is for general information and risk prevention only and should not be considered legal or other expert advice. The recommendations herein may help reduce, but are not guaranteed to eliminate, any or all risk of loss. The information herein may be subject to, and is not a substitute for, any laws or regulations that may apply. Qualified counsel should be sought with questions specific to your circumstances. © 2024 Federated Mutual Insurance Company.

Chevron
Estimating Your Company’s Emission Reductions

Chevron Renewable Energy Group offers tools to help you share your lower carbon intensity story. Engaging stakeholders in your lower carbon journey can help you reach your targets faster.

Chevron provides a monthly lower carbon summary report. This report estimates the metric tons of greenhouse gas emissions likely avoided by using our lower carbon fuel solutions. It also offers relatable comparisons, such as:

• The number of miles a passenger car would need to travel to release a similar amount of carbon emissions.
• The metric tons of coal burned to release a similar amount of carbon emissions.
• The number of acres of U.S. forests needed to sequester a similar amount of carbon emissions.

In addition, our carbon emissions calculator can help you determine how to reach your targets. As your company evaluates and evolves your lower carbon strategy, it may be helpful to visualize additional opportunities for reducing lifecycle carbon emissions by integrating more biofuels. Just enter the following:

• fuel application
• the timeframe
• gallons or liters
• annual fuel consumption
• the percentage of total amount of fuel that you want to convert to bio-based diesel.

The calculator provides an estimated reduction of Scope 1 fossil fuel emissions in metric tons. Learn more here.

For additional information about Chevron, please visit or contact Jason Lawrence. Chevron is an EMA Executive Committee Council Partner.