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

A way forward?

Chris Martin, the Union of Concerned Scientists

The RFS is a more flexible policy than many people appreciate, and Congress was smart to give EPA the authority to adapt the second phase of the policy to changing circumstances, and move us forward in a pragmatic way. Now EPA must use that flexibility and provide more clarity on the path ahead. To start with, EPA should acknowledge that 36 billion gallons (BG) is no longer a realistic target for 2022.

In fact, a careful reading of the RFS reveals that it not really a 36 billion mandate for 2022 at all. It is more accurately described as a mandate for 20 billion gallons, plus whatever level of cellulosic biofuel production is actually achieved, up to a maximum of 16 billion gallons (call it a 20BG+ RFS for short). Of this, 15 billion gallons comes from conventional biofuels like corn ethanol, which is already built out and for the most part locked into fuel markets. There is also a mandate for non-cellulosic advanced biofuels, fuels like biodiesel, sugarcane ethanol, and some newcomers like ethanol from grain sorghum. This mandate grows steadily to 5 billion gallons in 2022, which may sound modest compared to 15 billion gallons of corn ethanol, but is actually a very rapid expansion from where these fuels are now. So that adds up to 20 billion gallons. But the largest part of future mandate growth was supposed to come from cellulosic biofuels.

However, the scale-up of cellulosic biofuels is not happening at the rate anticipated in the original RFS schedule. Even with robust investment and steady growth, cellulosic biofuel production capacity in 2022 will probably be closer to 2 billion gallons than 16 BG. The RFS anticipated this possibility, and requires the EPA to adjust the mandates annually in line with projected capacity, a requirement reaffirmed in the recent court ruling. So in total the real minimum mandate for 2022 is likely to be closer to 22 billion gallons than 36, and it will be 2030 before we are likely to see a full 36 billion gallon mandate reached.

Because the lifecycle analysis process is time consuming and requires extensive input from stakeholders and experts, we suggest EPA conduct a thorough analysis and rulemaking in 2013 and 2014, and use that analysis as the basis for setting concrete criteria that would be used to decide on subsequent annual volume determinations in the 2016 to 2022 timeframe. Proving this type of forward looking guidance tied to measurable market factors (in agriculture, trade, fuel production and infrastructure) would provide all the stakeholders affected by the RFS more visibility to make their own plans.