Renewable Fuel Standard Mandates, or Not?

The Renewable Fuels Standard (RFS) provisions of The Energy Independence and Security Act of 2007 (EISA), mandates an increasing blend of renewable products into our domestic fuel supply. The law amends the Clean Air Act, and allows for an initial blending of food-based ethanol (corn), beginning in 2008. In subsequent years, the blend was to transition towards satisfying the annually increasing volumes with non-food “second stage” cellulosic ethanol, referred to as RFS2. The cellulosic, or advanced biofuels, are derived from biological materials such as wood shavings, leaves, corn cobs and grasses. In addition to the blend provisions, the law requires the program to achieve a 20% reduction in greenhouse gas emissions. Unfortunately, the costly experiment has failed to meet several goals, including air quality and the defined blend requirements.

To explain, in 2008 Congress mandated the EPA to set the RFS at a 10% blend of corn ethanol. Drivers then began to see labels informing them of E10 in fuel pumps. By 2010, the law states we were to move towards the use of non-food products (the second-stage RFS2), to fill the increasing blend requirements. However, in 2010 and 2011, no cellulosic biofuel was available to fill the volume requirements. Similarly, in 2012 and 2013 the available production did not amount to 1% of the mandated levels. As a result, the EPA adjusted the blend formulas allowing for first stage corn-based ethanol to fill the void.

In 2011, the EPA approved the blend increase to E15 (15% ethanol). An increase mandated to include cellulosic renewables (non-food) as opposed to corn. Now, several years into the program, cellulosic biofuels are still not available. Nevertheless, the EPA should not continue to adjust the volumes between ethanol and biofuels. It was at the onset of the program in 2007 that the Department of Energy (DOE), assured the taxpayers cellulosic ethanol would be ready and cost competitive with gasoline by the year 2012. Again, yet another goal the program failed to meet. Incidentally, that promise accompanied an astounding $385 million federal investment in six privately owned plants.

Unfortunately, at this time technological realities and market fundamentals simply do not support large-scale production of cellulosic biofuels and the industry is not near capable of meeting the RFS2 mandates. The creation of a law does not guarantee that science and economics will cooperate. As we look at the legal requirements and limits of alternative fuels made from wood chips and corn cobs, one thing is wholly apparent. We can’t get there from here.

So then, where are we? In regards to the ethanol mandate, we are quite possibly near the end. It was a poorly drafted piece of legislation that is not sustainable without government backing. Aside from corn farmers and their lobbyist, there is little support for continuing the project. Unfortunately, and unavoidably, the same corn farmers who benefited from the program will suffer the greatest financial impact upon its demise.

Comments (6)

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  1. Tom says:

    Y’know, regardless of who you are, when you mess with Father Time you risk getting your clock stopped.

    • Belinda Silva says:

      Hello Tom,

      Thank you for reading and commenting. Good point. I look at the free-market similar to a rubber-band. It is flexible, can stretch, twist, expand and contract. But, when overly manipulated, if the stress is not released in a controlled manner, it can really hurt when it eventually snaps back.

      An honest evaluation of the RFS shows the need for a well-defined exit strategy. A slow release of the artificially created pressure in the corn segment as opposed to the continued push to make the program work.

  2. CRS says:

    “Unfortunately, and unavoidably, the same corn farmers who benefited from the program will suffer the greatest financial impact upon its demise.”

    Those corn farmers will need to adjust to corn farming as it was and should be rather than living high on the federal government. Maybe then there will be enough corn for food to lower the artificially escalated prices.

    • Belinda Silva says:

      Thank you, CRS, for reading and commenting.

      I agree with your perspective. As I mentioned to Tom, a controlled exit from the program could minimize the impact and that in turn can make ending it more palatable to the corn segment.

      Consider banks, suppliers, implement manufacturers, and whole communities rely on a strong, predictable local farm economy.

      The program needs to end…and it will, one way or another. But, it certainly would be less painful for our national economy to end it with a strategic, incremental exit plan.

  3. Craig says:

    The article completely ignores biodiesel, which was included in RFS-2 and is a huge success as the country’s first and only commercially available advanced biofuel. A couple months ago, after exhaustive peer-reviewed research, the California Air Resources Board determined biodiesel to be the cleanest of any liquid or gaseous fuel and competitive with electric vehicles.

    • Belinda Silva says:

      Hello Craig,

      Thank you for reading and commenting on this blog. Opinions and discussions are always beneficial. The specific issue of biodiesel is one that can be addressed in more detail in a future post. I completely agree that biodiesel has had success and it looks promising.

      However,it is still derived from food products by a large percentage. Although we hear “we can just grow more”, what we can not do is increase the amount of global farmland. Land that one crop utilizes displaces another crop. More soybean or corn for fuel means less food and feed for humans and livestock.

      An area of concern is quality and operational issues. Being a biological fuel, it can change. It has a shelf life, and is susceptible to cold and water contamination. That contributes to corrosion. And, unlike petro-diesel, there are issues with microbial growth such as fungi, molds, bacteria. So, it still has room for improvement, to be sure.

      But the big issue is the massive amounts of federal funding for biodiesel to get it to this point. And it does not appear to be ready to meet the challenge of the consumer-driven free-market. For that reason, at this time, in my opinion it does not present itself as “commercially viable”.