Tuesday, November 20, 2018

Institute for Energy Research says Renewable Fuel Standard will hurt corn farmers

The Renewable Fuel Standard (RFS) has not been advantageous for consumers, and it doesn’t bode well for corn farmers either, according to Robert L. Bradley Jr., founder and CEO of the Institute for Energy Research in Houston.

The mandate has damaged vehicle and marine engines; reduced fuel efficiency; and between 2007 and 2014, raised motorists’ fuel costs by an estimated $83 billion, according to Bradley.

“Now there is evidence the RFS also will hurt corn farmers and ethanol producers, the very people the RFS was designed to help," Bradley wrote in a letter to the editor of The Des Moines Register. "Over the next seven years, the RFS calls for corn-based ethanol to cede market share to more expensive ‘advanced’ biofuels."

Congress created the RFS in an effort to reduce greenhouse gas (GHG) emissions, expand the nation’s renewable fuels sector and reduce its reliance on imported oil. The federal program originated with the Energy Policy Act of 2005 – which amended the Clean Air Act -- and then was expanded and extended by the Energy Independence and Security Act of 2007.

Specifically, the RFS requires transportation fuel sold in the United States to contain a minimum volume of renewable fuels. Implemented by the Environmental Protection Agency (EPA) in consultation with the U.S. departments of Energy and Agriculture, the program requires that a certain volume of renewable fuel replace or reduce the quantity of petroleum-based transportation fuel, heating oil or jet fuel.

Volumes provided in the statute cover biomass-based diesel, cellulosic biofuel, advanced biofuel and total renewable fuel. The yearly volume requirements have been extended out to 2022, among other changes made by the 2007 law.

For a fuel to qualify as a renewable fuel under the RFS program, EPA must determine that the fuel qualifies under the statute and regulations. Among other requirements, fuels must achieve a reduction in GHG emissions compared to a 2005 petroleum baseline, the agency said. 

EPA has approved fuel pathways under the RFS program under all four categories of renewable fuel. Advanced pathways already approved include ethanol made from sugarcane, jet fuel made from camelin,  cellulosic ethanol made from corn stover and compressed natural gas from municipal wastewater treatment facility digesters.

Because the federal law calls for displacing corn-based ethanol, Bradley thinks corn farmers, in particular, should be concerned.

“Refiners would still purchase corn ethanol without the RFS, since corn ethanol is the most cost-effective octane booster. But if the RFS remains in place, corn stands to lose out to products that do not pass the market test, simply because Washington, D.C., decrees it,” Bradley said.

The Clean Air Act gives EPA authority to adjust cellulosic, advanced and total volumes set by Congress as part of the annual rule process. The statute also contains a general waiver authority that allows the RFS volumes to be waived, in whole or in part, based on a determination that implementation of the program is causing severe economic or environmental harm, or based on inadequate domestic supply, according to the EPA.

“The RFS is being kept on life support by the (EPA) solely for political reasons," Bradley said. "With the United States awash in oil, the EPA could use its lawful discretion to reduce the biofuel volume requirements and lessen the impact on consumers. Instead, on Nov. 30, 2015 it announced even higher biofuel mandates."

But he said there’s a simple solution: Repeal the RFS.

“While none of the presidential candidates have called for full RFS repeal, some candidates (Jeb Bush, Sen. Ted Cruz and Carly Fiorina) … pledged to ‘phase out’ the mandate," Bradley wrote. "Consumers want good fuels that provide excellent mileage — not corporate welfare for farmers and ethanol producers at their expense."

Organizations in this Story

Institute for Energy Research The Des Moines Register U.S. Department of Agriculture U.S. Environmental Protection Agency (EPA) US Department of Energy

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