The People of America's Oil and Natural Gas Indusry

Repeal or Significantly Reform the RFS

Mark Green

Mark Green
Posted April 25, 2016

API’s Vote4Energy event earlier this month unveiled a number of energy policy recommendations for the Democratic and Republican platform-writing committees. Let’s focus on one – a call for the repeal or significant reform of the flawed federal Renewable Fuel Standard (RFS).

platformWe’ve posted on a number of issues with the RFS, which range from the negative economic impacts that could result from breaching the “blend wall” to possible risks to vehicles from using higher ethanol-blend fuel E15, to the program’s failure to establish a viable domestic cellulosic biofuels industry – one of the main reasons the RFS was created in the first place. Americans are clued into the RFS’ shortcomings and are concerned – reflected in recent polling. API’s Frank Macchiarola, group director for downstream and industry operations:

“Since the inception of the ethanol mandate a decade ago, the United States has undergone an energy transformation from a nation of energy dependence and scarcity to one of energy security and abundance. It is well past time to reform outdated energy policies to reflect the energy realities of today and tomorrow. … Simply stated, this is bad public policy that creates a potential harm to the American consumer.  And, it must be fixed. The American people agree.” 

That’s the context for industry’s call for repeal or significant reform of the RFS. The program is broken, outdated and poses potential risks for consumers. The calls to end the RFS also are associated with another policy recommendation in industry’s platform document, which is to pursue market-driven strategies – as opposed to command-and-control initiatives like the RFS that pick winners and losers. The platform document:

The U.S. oil and natural gas industry is a case study for how we can grow our economy, create jobs and protect the environment through market-driven innovation. The industry has been a leader in advancing innovative technologies both for production and emissions reductions and stands as a willing partner with the government in the development of industry standards and best practices - using this as an effective means to meet the mutually shared objective of safe and responsible operations that protect our air, water, workers, and communities.

In the approaching congressional debate over the RFS, it’s critically important that the discussion be fact-based and that it remain focused on protecting American consumers. Some points to consider:

  • EPA rightly lowered ethanol volume requirements from the levels set by Congress when the RFS was created. Lower volumes were needed to avoid crashing into the ethanol blend wall. Congress granted EPA waiver authority to adjust annual volume requirements to fit market realities.
  • EPA’s use of its waiver authority was based on a range of factors that constrain the supply of renewable fuels to consumers, including the need for new production technology, new vehicles and new retail and distribution infrastructure – each of which is part of the reason those fuels have been slower to expand.  
  • An argument, which some in Congress may assert, that EPA’s implementation of the RFS is contrary to original congressional intent, lacks legal basis. Congress authorized EPA to waive the mandate levels down to reflect market realities and protect consumers.
  • On cellulosic biofuels, EPA has been consistently overly optimistic in setting annual volume levels – even as it used its waiver authority to depart from the statutory mandates. The fact is the courts have admonished EPA to “aim at accuracy” when releasing volume numbers.
The broader point is that the RFS must be repealed or significantly reformed. The program is broken, out of date and could hold risks for U.S. consumers – all strong arguments for Congress to act decisively on the RFS.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.