The RFS is bad policy. It drives up costs for families and mandates a product on the American people whether they want or need it. Two different approaches to dealing with this problem are before Congress. The first and more preferable option is a complete repeal of the RFS, such as HR 703 by Rep. Goodlatte or Sen. Cassidy’s Renewable Fuel Standard Repeal Act. The second approach taken by bills introduced by Rep. Goodlatte (HR 704) and Senators Toomey and Feinstein (S. 577) primarily focus on corn ethanol and fall short of true reform. Here are seven reasons why this corn-only approach is not a step in the right direction:
- It’s an unnecessary government mandate on the American people – While the partial repeal deals with the implied corn ethanol RFS mandate, it fails to address the cellulosic and advanced biofuel mandates, which force expensive products on the American people. The government should not dictate which fuels consumers must use. If people want to use ethanol or gasoline or a mixture of both, they should be able to decide, not Washington bureaucrats.
- It focuses the mandate on the most expensive forms of biofuels –Today, corn ethanol is a viable market product because it is a cost-effective way to increase the octane in the fuel supply. With or without the RFS, corn ethanol will continue to be used because it is a less expensive product than other alternatives. By reducing the implied corn mandate and leaving the mandates for other forms of biofuels in place, it props up more expensive forms of biofuels (namely advanced and cellulosic). These biofuels are not viable in the market because they are incredibly expensive—for instance, the Defense Logistics Agency has a history of paying exorbitant sums for “advanced” biofuels, with many contracts averaging $30 to $60 per gallon, compared to around $3 for conventional fuels. If the mandate is focused toward costly advanced biofuels, consumers will feel the brunt of rising gas prices as refiners struggle to meet the mandate.
- It gives too much discretion to the EPA – Repealing the implied corn mandate does nothing to hinder EPA’s ability to illegally promote cellulosic or advanced biofuels. The EPA mandated refiners to produce unrealistic amounts of cellulosic. In 2010, when refiners could not reach EPA’s impossible goal to blend millions of gallons of nonexistent cellulosic biofuel, the refiners took EPA to court and won. The D.C. Circuit Court found that EPA’s actions violated the law. This, coupled with the fact that the EPA has not set RFS volume standards for 2014 or 2015, proves that the EPA cannot be trusted to regulate renewable fuel standards. Additionally, when the programs volume levels expire in 2022 the EPA can continue to run the program as it sees fit.
- It allows the EPA to inflate “advanced biofuel” numbers with accounting gimmicks – In the face of nonexistent cellulosic production, the EPA simply redefined what constitutes “cellulosic” to include certain types of compressed natural gas, liquefied natural gas, and electricity. This redefinition defies the intent of the law, which is to blend more renewable fuel into gasoline. It is physically impossible to blend CNG, LNG, and electricity into gasoline, which means refiners are simply buying credits to comply with the law on paper without actually increasing the supply of renewable fuel. Failing to repeal the entire RFS would allow the EPA to continue this illegal practice.
- The proposal to base the cellulosic mandate on “actual” production does not solve the problem – The Goodlatte partial reform bill aims to set the required cellulosic volumes at the “actual” volumes from the previous year. The problem is, which level of production is the actual level? Depending on which EPA definition of cellulosic is used, the production level in 2014 was either 44,168 gallons or over 33 million gallons. Without significantly reigning in EPA’s authority, this provision will do little to protect consumers.
- It encourages inefficient ethanol trading – Another byproduct of the advanced biofuel mandate is the absurd Brazilian sugarcane/corn ethanol trade. In the name of reducing GHGs, the U.S. imports sugarcane from Brazil for use as an “advanced” biofuel and exports corn ethanol to replace it in Brazil. EPA does not account for these GHG emissions. This process only increases costs and overall energy used. Lastly, sugarcane ethanol is not an “advanced” fuel. It has been around since the 1920s.
- It moves the RFS toward a California-style Low Carbon Fuel Standard (LCFS) – Removing the corn-ethanol mandate simply makes the RFS more like California’s hugely expensive LCFS. One study determined that California’s LCFS could raise the price of a gallon of gas by over $2.50. Another study found that a potential Northeast/Mid-Atlantic LCFS would cost 147,000 jobs and lower the GDP by $27 billion. A corn-only repeal would pave the way for a national LCFS, which would cost Americans money at the pump and result in lost jobs.
To see a more detailed analysis regarding the problems with partial reform, see this post.
The American Energy Alliance urges Members to refrain from supporting HR 704 or S. 577 to partially repeal the RFS and instead co-sponsor HR 703 and any viable Senate companion to completely repeal the program. Co-sponsoring HR 703 will be calculated into a Member’s final overall score in the American Energy Alliance Scorecard.