Renewable Fuel Standard

Sound regulations protect human health and the environment while promoting economic development.

Unfortunately, some regulations are not only harmful to small businesses and the economy, but unnecessary for environmental protection — sometimes even counterproductive.  Such an example is the Renewable Fuel Standard (RFS).

In short, the RFS is an outdated policy that no longer accomplishes its intended goal.  It needs to be fixed.

The RFS is an Outdated Policy

When Congress created the Renewable Fuel Standard (RFS) more than a decade ago, lawmakers hoped the federal fuels program would spur development of a domestic biofuels industry that would help reduce oil imports with billions of gallons of homegrown ethanol – with a particular focus on increasing volumes of cellulosic biofuel made from corn stover, wood chips, miscanthus or biogas.  The concept was to blend increasing amounts of these additives into gasoline and diesel fuels. 

But since then, a few important and unexpected things happened:

  • America became the world's leading producer of oil and natural gas.
  • The demand for gasoline decreased from expectation.
  • The anticipated cellulosic biofuels industry did not become viable.

These new energy realities have made the RFS obsolete.

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The Renewable Fuel Standard presents a number of concerns and problems.

The E10 "Blend Wall" Problem
Today, most gasoline contains 10% ethanol.  But if the RFS requirements continue to be implemented, the U.S. could exceed this percentage.  Higher levels of ethanol could damage engines of the overwhelming majority of cars as well as boats, lawnmowers and other gasoline engines, including those used by the military.  Automakers have warned these increased blends of ethanol could void car warranties.

Here's where the problem comes in: there comes a point at which fuel refiners can no longer meet the EPA's ethanol blending requirements without putting more than 10 percent ethanol into each gallon of gasoline.  This is called the “blend wall.” 

At that point refiners will have only two options: produce E15 (15 percent ethanol) or make more E85 flexfuel (a blend of 51 to 83 percent ethanol that can be used only in flexfuel vehicles) which make up a mere 5 percent of the US vehicle fleet today.

Concerns about E15 and E85 Fuel
Engine Damage:  Most vehicles on the road today aren't recommended for operating on E15 by manufacturers, and studies have found issues with both E15 and E85 fuel.  A recent CRC study found that E15 fuel could result in the risk of engine and fuel pump damage. 

Beyond the concern of damage to vehicle engines, ethanol blends greater than E10 could significantly damage small engines, such as motorcycles, boats, off-road vehicles, and other small equipment like lawnmowers and snow blowers.

Poor Fuel Economy:  E85 fuel has been found to have a lower fuel economy (i.e., MPG) than regular gasoline.  E85 is only available at less than 2 percent of retail gas stations, and is compatible with only a small handful of vehicles on the road today.

Harm National Security:  What's more, there's an important connection to our national security here.

There is no single organization that is a larger consumer of fuel than the American military.  The military needs to have confidence that their equipment and their vehicles are going to work properly when they are needed.  The potential costs of equipment failure caused by damage from fuel with an ethanol level that exceeds the blend wall could be catastrophic — both in terms of the financial cost of replacing the damaged equipment and vehicles, and in the potential for lost life on the battle field.  Ethanol fuel-induced damage could also significant affect military readiness, preventing or causing delays in the transport of equipment and personnel and supplies and crucial moments. 

The risks are just too high.

Concerns about Economic Impact
Most of the country's 156,000 gasoline stations are independent businesses, not owned by major oil companies.  Presently, fewer than 5,000 of the 700,000 gas dispensers are certified for E15, and only 2% of all gas stations are certified for E85.  With RFS mandates, these small businesses could be forced to spend tens of thousands of dollars to retrofit equipment to dispense high ethanol content fuels.

The push by the EPA to increase the RFS also ignores what consumers are saying they really want.  E85 represents less than 0.1% of gasoline demand.  Associations representing gasoline retailers were very clear in comments to the EPA that a lack of consumer demand was the primary reason retailers are reluctant to install E85 infrastructure.  Compare this with the demand for E0 — gasoline with 0% ethanol — which reaches as high as 5% of the gas market.

Concerns about Corn Crops and Higher Food Costs
Presently, 40% of the U.S. corn crop is consumed producing ethanol.  Ethanol blends greater than E10 put upward pressure on corn supplies, increasing costs of production and supply sensitivity to farmers who use corn for feedstock.  Increased ethanol mandates have already driven up food prices and dedicated crops and/or land to generate energy instead of food.  The EPA's proposed increases in the RFS will only make this problem worse.

A 2007 law requires increasing use of Cellulosic Ethanol, an advanced form of ethanol that theoretically can be made from a broader range of feedstocks. But it isn’t available, because no one is making it commercially. Even so, the EPA continues to assert that aggressive mandates, not based on actual production, will somehow stimulate production. 

Even without federal mandates, oil companies will continue to buy ethanol and blend it into gasoline in volumes that are economic and safe for retailers to store and dispense and for consumers to use in their automobiles. 

Concerns about GHG Emissions
Studies show that the EPA could actually lower US greenhouse gas emissions by millions of metric tons each year if they reduce or eliminate the corn ethanol mandate.  Yes, you read that right.  The RFS, instituted for the purpose of reducing GHG emissions is actually making those emissions worse because increased ethanol consumption could take away precious grasslands, wetlands and wildlife habitats.

It is time Congress looked at fixing the RFS to mitigate the impact that over-regulation has on our nation’s economy.

 

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