Oversight of the Renewable Fuel Standard

February 25, 2016

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Prepared statement for the record for the U.S. Senate Environment and Public Works Committee Hearing on Oversight of the Renewable Fuel Standard


Thank you Chairman Inhofe, Ranking Member Boxer, and Members of the Committee for inviting me to submit for the record my research on the effects of the Renewable Fuel Standard (RFS) and prospects for reform. I am Senior Policy Analyst at the George Washington University Regulatory Studies Center, where I analyze the effects of regulation on public welfare. My research focuses especially on the effects of regulations governing the energy and environment sphere, including the Environmental Protection Agency’s RFS rules.

I appreciate the Committee’s interest in evaluating the RFS program and determining whether there are opportunities for Congress to improve it. My prepared statement includes the following points:

The statute that created the RFS program was enacted over a decade ago, and since that time new information has become available about the effects of mandated biofuel production.

Due to falling domestic demand for gasoline and delays in the development of cellulosic ethanol, the statutory biofuel production levels outlined in the Energy Independence and Security Act of 2007 put the RFS program on an unsustainable trajectory.

New information and research on the environmental effects of the RFS program indicate that mandated biofuel production may not reduce greenhouse gas emissions relative to gasoline. In addition, biofuel production produces criteria pollutants and damages water systems from crop fertilizer runoff. These environmental effects are significant and negative.

The Renewable Fuel Standard Program

In 2005, Congress passed the Energy Policy Act (EPAct), which, as amended in 2007, requires the Environmental Protection Agency (EPA) to issue regulations mandating the production and use of biofuels such as corn ethanol, cellulosic ethanol, and biomass-based diesel. As a part of the RFS program, the EPA sets biofuel blending targets that require refiners to blend specific amounts of renewable fuels into transportation fuel, such as gasoline and diesel. The RFS program was created to reduce U.S. dependence on both foreign oil and domestic gasoline consumption. To that end, EPA regulations currently mandate the production of 18.11 billion gallons of total renewable fuel in 2016.

In its recent final rule, EPA set minimum standards for the production of biodiesel and cellulosic biofuel, which also count toward the agency’s total renewable fuel standards. Although it is the largest type of domestic biofuel, corn ethanol is only one component of the overall total renewable fuel standards promulgated by EPA. The agency also sets advanced biofuel standards, which can be met by the production of three main fuel sources: biodiesel, imported sugarcane ethanol, and cellulosic biofuel. The total renewable fuel standards prescribed for 2015 and 2016 must be met through a combination of corn ethanol and advanced biofuels (cellulosic and biodiesel).

While the stated goals of the RFS are to reduce crude oil imports and increase the use of renewable fuels, an implicit purpose of the RFS program is to benefit the environment by moving away from fuels that result in substantial net carbon emissions (e.g. gasoline and diesel). According to EPA, the RFS program “was created to promote substantial, sustained growth in biofuel production and consumption” resulting in “reductions in greenhouse gas emissions, enhanced energy security, economic development, and technological innovation.”[1] However, while crude oil imports and gasoline demand have decreased, it is less clear whether the increased production of biofuels has actually reduced emissions or benefitted the environment.

The literature is mixed on the environmental effects of biofuel production, with many estimates indicating that the production of ethanol and biodiesel may significantly increase emissions, specifically of the greenhouse gases carbon dioxide (CO2) and nitrous oxide (N2O) and criteria pollutants such as particulate matter. The following sections examine the statutory authority underpinning the RFS program, explain the unsustainable trajectory of increased biofuel production, and review the recent research on the environmental impacts of the RFS program.