The US Renewable Fuel Standard and repeal, reform: The Digest’s 5 Minute-Guide

The real problems and immediate relief

Michael McAdams, Advanced Biofuels Association

In 1990, this Committee saw in the Clean Air Act an opportunity for biofuels to contribute to meeting national energy and environmental goals by creating a 2% oxygen mandate for gasoline. In 2005 you created the RFS and called for a mandate of 7.5 billion gallons by 2012, and then in 2007 amended it with a focus to develop an innovative advanced and cellulosic industry and called for 36 billion gallons by 2022.

In the last six years, US businesses have spent $14.72 billion dollars in pursuit of the policy goal you collectively laid down for this country. These numbers represent people and jobs all over America: jobs in rural America planting and cultivating the best new energy crops, jobs building and operating biorefineries, technology and engineering jobs, and laboratory jobs researching new feedstocks and enzymes and many more.

To repeal the RFS would pull the rug right out from under them and change the rules in the first half of the game. This confusing policy signal is a benefit to incumbent players in the fuels market and a significant disadvantage to those trying to finance and build new innovative technologies.

A potential short term solution can be found at EPA. When Congress passed the RFS2 in 2007 it provided EPA with significant flexibility and authority to address issues which could arise from hurricanes, droughts, and unforeseen economic factors….between the gallons produced in all categories of the RFS and the extra RINs brought forward from 2012, there are sufficient RINs and gallons to meet the proposed targets of the RFS for 2013.

The challenge is whether that will still be true in 2014 and 2015.

Much of what is difficult about the RFS today is the uncertainty of the annual obligations. ABFA and others have called on EPA to release the Renewable Volume Obligations (RVOs) for 2013 and 2014 as quickly as possible. Providing an additional year of clarity with the 2015 RVOs would help rapidly defuse much of the economic pressure those of us on this side of the table are feeling. This Committee should encourage EPA to explore a combined 2014 and 2015 rule.

A clear signal from EPA, given to stakeholders in advance, with targets for 2014 and 2015, would be a huge step forward in adjusting EPA’s procedures to help all of our markets work more smoothly.

In today’s Digest — “a way forward?” – by following the page links below.