The Time is Right for the EPA to Cut Back the Renewable Fuel Mandate

Sofie Miller
by Sofie E. Miller, Senior Policy Analyst
September 07, 2017

The deadline closed last week for interested parties to file comments on the Environmental Protection Agency’s latest proposed Renewable Fuel Standard (RFS), which would require 19.24 billion total gallons of biofuel to be blended into transportation fuels in 2018 and 2019. EPA’s proposed standards fall short of statutorily required levels by 6.76 billion gallons, and if finalized would represent a 40 million gallon decrease from the standards that were finalized in December for 2017.

This biofuel mandate is bad news for the environment and for American consumers: in the past decade evidence has shown that mandated ethanol production could be creating more carbon dioxide emissions than gasoline and polluting waterbodies via nitrogen fertilizer runoff, all while benefitting a narrow group of special interests at the expense of consumers.

What is the Renewable Fuel Standard?

The RFS program requires refiners to blend specific amounts of renewable fuels into transportation fuel, such as gasoline and diesel. The RFS program was created in 2005 to reduce both American dependence on foreign oil and domestic gasoline consumption. While the stated goals of the RFS are to reduce crude oil imports and increase the use of domestic renewable fuels, an implicit purpose of the RFS is to benefit the environment by moving away from gasoline and diesel, fossil fuels that result in substantial carbon emissions.

Environmental Damage

Since Congress first authorized the RFS program in 2005, academic research has indicated 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. This prospect was recently recognized by EPA’s Office of the Inspector General, which last year released a report recommending that EPA satisfy its statutory obligations by analyzing and addressing the program’s negative environmental impacts.

While estimates vary, recent research indicates that the environmental benefit of the RFS is extremely modest at best and, at worst, could result in a significant increase in CO2 emissions over gasoline. Overall, the post-2007 literature largely reinforces that ethanol production increases emissions and damages wetlands.

The two main sources of this environmental harm are changes in land use and increased fertilizer use, which lead to the release of a significant amount of soil organic carbon and cause water pollution, damage ecosystems, harm biodiversity, and contribute to the Gulf of Mexico’s “Dead Zone.”

Regulatory Capture

Unfortunately the environmental impacts are not the end of the story for consumers, who ultimately bear the burden of the RFS program – via higher prices not only for fuel, but also for food and other goods that rely on inputs like corn and soy. While these rules are a bad deal for American consumers, they are highly profitable for the domestic soybean and corn growers and refiners, which enjoy a government mandate that consumers use their products.

Given the availability of new information on the impacts of the program, Congress and EPA should reevaluate whether the latest proposed Renewable Fuel Standard is accomplishing what Congress intended: a greener fuel future that benefits consumers and the environment alike.