How the Renewable Fuel Standard Failed by Succeeding

Gas, Fuel, Car, Pump
Gas, Fuel, Car, Pump

In publishing its proposed standard for renewable fuels in the Federal Register on June 10, the Environmental Protection Agency (EPA) ignored the wisdom of King Solomon and issued a proposed standard that essentially splits the baby in half by tinkering with a fundamentally flawed law.

Stuck with trying to implement a law that slammed into technical barriers, the EPA modestly increased the amounts of renewable fuels refiners are required to blend over previous years but these levels fall below the amounts mandated by law.

EPA’s half measures drew immediate criticism from the warring industries affected by the agency’s decision. The biofuel industry is outraged over the lower production levels while the oil industry, which is being forced to integrate biofuels into its energy infrastructure, wants the entire law scrapped.

As Reagan knew, centrally planned command and control government solutions are doomed to fail and the RFS serves as a classic example.

The inability for the federal government to kill the Renewable Fuel Standard (RFS) program is a perfect illustration of what President Reagan meant when he said “The nearest thing to eternal life we will ever see on this earth is a government program.”

As Reagan knew, centrally planned command and control government solutions are doomed to fail and the RFS serves as a classic example. But in D.C., unlike the private sector, failure does not translate into the death of a program.

EPA’s RFS is the amount of renewable fuel that must be blended into the nation’s transportation fuels.  The new three-year proposal is 15.93 billion gallons for 2014, 16.30 billion gallons for 2015 and 17.40 billion gallons for 2016 and these levels are much lower than 18.15 billions of gallons, 20.5 billions of gallons and 22.25 billions of gallons, respectively.

The 2007 law that guides the RFS mandates the amount of biofuels from specific categories of energy such as cellulosic biofuels, biomass-based diesel, advanced biofuels and renewable fuel.

The amount of corn-based ethanol is determined by subtracting the amount of advanced biofuels from the total renewable mandate. For 2016, that translates to 14 billion gallons of traditional farm generated ethanol.

There is no doubt the law is flawed and outdated.

The fact that the EPA is issuing the volume standard for 2014 in 2015 – more than a year late – and the level of biofuels that must be used are lower than the amount mandated by law are objective measures of a failed program.

EPA openly admits this in its Federal Notice and clearly states it can’t meet the mandates dictated in the law.  For example, EPA said, “Over the past few years, we have seen analysis concluding that the ambitious statutory targets in the Clean Air Act exceed real world conditions.”

The EPA can’t meet the law’s objectives because Congress couldn’t accurately predict the future energy market or the rate of technology development.

First, Congress overestimated the ability of technology to convert cellulose from wood chips and switch grass into ethanol.  Production of cellulosic ethanol is soon expected to approach 80 million gallons a year but that level is a tiny percentage of the 1.75 billion gallons Congress decreed for 2014.

In addition to the technical challenges of creating advanced biofuels, Congress also erred when it mandated increasing amount of renewable fuels for future years.  The level decreed by Congress also assumed an increasing level of gasoline usage over time.

Congress’ gasoline projection was wrong.

Since the gasoline usage is below what Congress projected but the mandated amount of ethanol is increasing, the percentage of ethanol per gallon hit what’s called the blend wall.  When the level of ethanol is higher than 10 percent – the blend wall – it can harm engines and energy infrastructure.

The root cause of this failed program is…

Read the rest of Tom Borelli’s commentary at ConservativeReview

Photo credit FolsomNatural

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