Growing Consensus On ‘Unworkable’ RFS

By Energy Tomorrow Blog on March 13, 2015 at 2:00 PM

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To the chorus of voices sounding the alarm on the broken Renewable Fuel Standard (RFS) – AAA, automakers, outdoor power equipment manufacturers, marine manufacturers, turkey and chicken producers, restaurant companies, grocery manufacturers, environmental non-profits and anti-hunger groups – add another: the advanced biofuels industry.

Given the fact the RFS was designed to encourage development of advanced and cellulosic biofuels, the Advanced Biofuels Association’s call for significant RFS reform is a game-changer in the ongoing public policy debate. ABFA President Michael McAdams at this week’s Advanced Bioeconomy Leadership Conference:

“… the Renewable Fuels Standard (RFS) – the very tool that was created to foster our industry – has become one of the greatest obstacles to continued development of the advanced and cellulosic biofuel industry due to inconsistent and poor implementation.”

The issue is the way the RFS, through annual ethanol mandates, has resulted in ever-increasing production of ethanol made from corn – versus ethanol and other biofuels made from non-food feedstocks. McAdams said the corn ethanol industry produced 14.3 billion gallons in 2014 and biomass-based diesel produced about 1.7 billion gallons, compared to the non-diesel advanced cellulosic sector’s 2014 production of less than 180 million gallons. McAdams:

“Eight years after its passage, it is easy to see that the RFS may be working for some, but it is only minimally helpful to advance the promise and potential of next-generation renewable fuels.  We need to acknowledge the simple fact: that the RFS is not equally helpful to all sectors of the biofuels industry.”

Hence the concerns from various industries and advocacy groups associated with food production, food sales and anti-hunger efforts. Bob Greco, API downstream group director:

The ABFA announcement “just further narrows the coalition of people who support the RFS. It’s basically the corn growers and the corn ethanol manufacturers at this point. And while … supporters of reform are growing, you’re shrinking support for the status quo. It’s recognition of how badly broken the RFS currently is.”

Greco and representatives of the Environmental Working Group (EWG) and ActionAid held a conference call with reporters to talk about problems with the RFS.

“A chorus of concerned groups — from consumer groups to environmental groups to anti-hunger groups to industry groups – are calling for repeal or reform of the nation’s ethanol mandates under the Renewable Fuel Standard.”

Greco said though the RFS was well-intended when it was enacted in 2007, the United States’ energy situation has dramatically changed since then with surging domestic production of oil and natural gas and declining demand for gasoline. The RFS is requiring industry to squeeze more ethanol into a smaller amount of gasoline, bringing the country close to the ethanol “blend wall,” where the RFS would force more than 10 percent ethanol into each gallon of gas. Greco:

“This is concerning because most cars on the road today cannot tolerate these higher ethanol blends. Testing by the oil and auto industries shows these blends could significantly damage millions of cars on the road. Engines and fuel systems just were not designed for fuel with higher than 10 percent ethanol. And, automakers have said they will not honor warranties when consumers use these higher blends.”

He called the RFS “unworkable” and said the program is “stuck in the past.”

EWG’s Scott Faber focused on the environmental impacts of corn ethanol production under the RFS, which was supposed to help the country meet environmental goals:

“Unfortunately, exactly the opposite is exactly what has happened. Implementation of the RFS has significantly increased greenhouse gas emissions when compared to emissions from gasoline, it has increased water pollution, increased the emission of criteria air pollutants and it has destroyed valuable habitat for wildlife.”

ActionAid’s Kelly Stone said the RFS is responsible for half of the world’s growth demand for biofuels, which has “serious implications for hunger and land rights around the world.” These are especially acute in the globe’s poorer countries:

“Congress had good intentions when it created the Renewable Fuel Standard, but the unintended costs are too high and it’s time for reform. We shouldn’t be fueling hunger when we’re fueling our cars.”

The RFS is broken, and its brokenness is having wide impact, which is the crucible for such a broad coalition of interests who can’t abide the status quo.

By Mark Green 

Originally posted March 11, 2015

Energy Tomorrow is brought to you by the American Petroleum Institute (API), which is the only national trade association that represents all aspects of America’s oil and natural gas industry. Our more than 500 corporate members, from the largest major oil company to the smallest of independents, come from all segments of the industry. They are producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies that support all segments of the industry.

Comments

  • B_Brandon

    Just another distortion from Big Oil. “…due to inconsistent and poor implementation.”
    does not mean broken. Nor does “…the simple fact: that the RFS is not equally helpful to all sectors of the biofuels industry.” mean there is a lack of support for the RFS. While Big Oil and the APA needs to reduce itself to finding support for dismanteling the RFS from under-informed groups like poultry producers, Action Aid and grocerers who really all suffer far more from oil prices than from the RFS. Renewable fuels and the RFS on the other hand have the support of Chemical companies like Dupont and BASF, Oil companies like Shell and Total and health and environmental groups like the American Lung Association and The Union of Concerned Scientists.

    Much of the claims in this article are outright falsehoods that Big Oil has effectively deployed to reduce support for alternative fuels. There really is no ‘Blend Wall’, only a ‘Blend door’. The RFS was designed to allow this door to be opened, but Big Oil wants to keep this door locked and for them to hold the keys. When the RFS was written, it was imperfect and it could use some improvements. The big improvement would be the elimination of the ‘off ramp’ provided to oil companies which allows them to buy their way out of compliance rather than buy RINs or blend renewable fuel.

    This is a fight over market share where the incumbant wants to maintain their moonoply control. Anyone truly informed about fuel, feed and health hazards from oil should be all behind the present RFS or an improved RFS as the ABA president presented on behalf of his members. But, as Brooke Colman pointed out during the same session, these suggested improvements are all things that were originally tried to be included in the RFS but were blocked by its opponents. Now is not the time to address these weaknesses in the RFS because the facts will just be ‘ginned up’ into distortions as has been done here. The simple fact is that the ‘chorus of support’ is increasing, but a hold the course stratagy is better for now.

    • Erocker

      The Union of Concerned Scientists (UCS), is critical of using corn grain for ethanol. After my initial research into what you might be saying I have concluded you information is just lies and distortions.

      • B_Brandon

        UCS has been critical of corn ethanol but recently have adjusted some of their concerns. But this concern does not mean they are not supportive of the RFS and renewable fuels. Would you please share what you found in your ‘initial research’. Without facts, your charges are merely biased babble.

        • Erocker

          That’s the way I feel about your rambling no facts just biased babble. I did do more research on the Union of concerned Scientists and found a lot of information on how corn ethanol is distroying the ground water and causing a bigger dead zone in the Gulf of Mexico. There were other stories about how bad corn ethanol is. The only positive I saw was some hopes that the not corn ethanol might be a viable product in the future. I saw no endorsement for corn ethanol in their information. I included a link to some of their information. It is not hard to find more just try googling it.
          https://s3.amazonaws.com/ucs-documents/clean-vehicles/corn-ethanol-and-water-quality.pdf

          • B_Brandon

            So…are you against ethanol or just against corn? You seem unable to direct your comments to the initial issue posed by the article; that the Advanced Biofuel Association had joined the groups calling the RFS ‘broken’. I submitted that their comments were not calling the RFS ‘broken’ only that it could be improved to better benefit advanced biofuels. After returning the DDGS to the animal feed market, ethanol only accoounts for about 20% of the corn raised with animal feed accounting for over 50%. Why don’t you rail at livestock producers for creating the dead zone in the Gulf? I have recognized that the UCS have been critical of corn ethanol as your link to an old article says. But more recently, the UCS have revised this opinion somewhat. The dead zone in the Gulf comes and goes in size and moves around quite a bit. These variations do not correlate to the amount of corn grown. What they do correlate to is weather patterns. Through this analysis, farmers have adjusted their use of fertilizer and its application to account for weather conditions and to minimize nutriant pollution. Other residential dwellers have not, nor have duel storm/sewer systems in older cities been improved to prevent overflow and poor septic systems still remain a high level problem with nutrient pollution. Your comments lend nothing to increasing knowledge and with that I will be signing off on this conversation.

          • Erocker

            All I can add is your comments lead nothing to increasing knowledge, appears to be just a lot of biased babble. Sorry to use your own words but it does fit you.

    • Dotherightthing

      The blend wall is real and E10 is at the wall. This explains the move to increase the mandated level to E15. The main purpose is to increase the price of corn. The market would be better served if there were no mandates, RIN’s, or subsidies for corn or oil. Ethanol is force fed on the consumer. Because of the mandate and RIN’s. E10 is forced on the consumer by making non ethanol gas more expensive than it would be in a free market. The political process has politicians in Iowa taking money from Big Agriculture Companies swearing their allegiance to corn ethanol. The consumer is the one that takes it in the pocket book. Simply bad politics!

      • B_Brandon

        You need some real facts rather than your misinformed opinions. First, there is no move to mandate E15. If you were informed, you would know that ethanol inclusion advanced faster than the mandate. This is because it is the least costly octane enhancer on the market. If you would do research, you would know that with the advent of greater ethanol blending, the price differential between gasoline and crude seperated with gasoline being relatively less costly. In short, the concumer has benifited from ethanol inclusion and would benifit more at a E30 blend rate because of increased thermal efficiencies that would be available to auto manufacturers. The extent of your uninformed bias can not be fully addressed in this format.

        • Dotherightthing

          Brandon simply get rid of the RIN’s and the mandate and see how you stand. It’s well known the program calls for yearly increases in the amount of ethanol required. The EPA has not enforced the quota recently because it would require raising the level to E15. Brandon if corn ethanol has made fuel less expensive, explain to me why it cost twice as much to use E85 verses gasoline. With the mandate (require blenders to use a quota of ethanol) and RIN’s the Non ethanol gas price is artificially raised to enhance the price of E10. The political playground antic’s in Iowa are well documented.

          • B_Brandon

            You are grossly mis-informed about how the RIN system works and what the mandate contains. The mandate is nested which allows for flexibility on what fuels can be used to meet the mandate. Biodiesel, drop-in diesel and gasoline, bio-gas, DME and renewable electrons for electric vehicles all generate RINs and go to the mandate. The EPA initial draw back from volumetric obgligations was because of an incorrect scoring method used by the Office of Budget who also did not understand the RIN system. In reality, the production of biofuels were about equal to the legislated requirement and did not result in price increases. Your statement that “the Non ethanol gas price is artificially raised to enhance the price of E10.” is non-sensical. Maybe you could give an example of how this might work in your mind. I challenge you to demonstrate where and how E85 costs twice as much as gasoline anywhere. In the summer of 2014, E85 prices in Michigan and Minnisota were sufficiently low to make E85 less costly than gasoline. This was mainly because ethanol refiners entered the distribution network and passed the savings on to customers rather than pocketing the margins like oil controlled distribution networks did.

          • Dotherightthing

            Fueleconomy.gov has at 80% more right now. Good government site. Price varies with fuel prices. E85 has very seldom cost less to use since 2005. Blenders are fined if they don’t use the required amount of ethanol. Far from a free market. Consumers are getting fed up with the program. At some point this will turn on the corn lobby. It’s well documented they want higher levels of ethanol required. Less than 4% of flex owners use E85. Why would anyone with common sense?