1. The RFS
The Renewable Fuel Standard (RFS), created under the Energy Policy Act of 2005 and expanded in 2007, is a federal program that requires transportation fuel sold within the United States to contain a certain volume of renewable fuel, meant to increase with each passing year and offset the use of petroleum based fuel. The yearly blend volumes were determined by Congress and the program is administered by the Environmental Protection Agency (EPA). Each category of renewable fuels under the RFS must meet a certain baseline of greenhouse gas (GHG) emissions reduction throughout the production process as compared to the petroleum fuel that it replaces. Conventional biofuels, including ethanol derived from starch feedstocks such as corn or sorghum, must demonstrate a 20% or greater reduction in lifecycle GHG emissions. Advanced biofuels – derived from feedstocks such as vegetable oil, waste grease, soy, sugar cane, or sugar beets – must demonstrate a 50% or greater reduction in lifecycle GHG emissions. These fuels include soy-biodiesel, renewable diesel and sugar cane ethanol. Cellulosic biofuels must demonstrate a 60% or greater reduction in lifecycle GHG emissions. These fuels include ethanol produced from corn stover, dedicated energy grasses and corn kernel fiber.
2. Small Refinery Exemptions (SREs)
A provision of the RFS allows “small refineries” to petition the EPA annually for an exemption from RFS blending obligations. The EPA may grant this exemption if it is determined that the small refinery has demonstrated “disproportionate economic hardship.” In recent years, the EPA has significantly increased the number of exemptions granted to oil refineries, eliminating billions of gallons of renewable fuels from the RFS mandate. Most recently, on August 9, 2019, the EPA announced 31 new exemptions, cutting another 1.43 billion gallons of renewable fuels from the nation’s transportation fuel supply. In addition, to maintain the integrity of the RFS, the law requires that the EPA prospectively estimate the amount of fuel that may be exempted due to SREs when setting the annual obligations for refiners. In recent years, despite the uptick in actual exemptions, the EPA has been estimating zero exempted gallons. Biofuels supporters have urged the EPA to adopt a three-year rolling average to ensure a fair, reasonable and accurate estimate.
3. Growing Role for Corn Ethanol and Soy Biodiesel
There are many exciting feedstock options for biofuels production today and in the research pipeline, from cellulosic ethanol to used cooking oil and algae. But today, some of the most cost effective and environmentally beneficial biofuels are the ones we know best. Even as technological innovation changes the future landscape of feedstock possibilities, that same innovation is helping U.S. farmers simultaneously be more productive and better stewards of the land. Corn and soybeans supply much needed protein for the growing world population while their non-protein components can be processed into low-carbon biofuels. As Iowa farmers face income levels half that of 2013 and economic headwinds blowing hard due to various world trade disagreements, growing demand for corn and soybeans via a robust and growing biofuels market is vital to rural prosperity. The next president of the United States should embrace and promote a growing role for corn
4. Year-round sales of E15
E15 is transportation fuel blended with 15 percent ethanol, which EPA approved for use in 2001 and newer vehicles in 2011. In 1990, prior to the approval of E15, Congress limited the amount of evaporative emissions from vehicle fuel, measured by Reid Vapor Pressure (RVP), with a lower limit during summer months. While pure ethanol has a low RVP, RVP rises when ethanol is combined with gasoline at low levels, but then falls as the ethanol blend increases. Congress provided a small RVP allowance for 10 percent ethanol blends (the highest level of ethanol blended at that time) in recognition of the fuel blend’s lower tailpipe emissions. EPA updated the RVP regulation in 2019 to provide the same allowance for E15 that 10 percent blends receive. Providing parity for E15 allows this fuel to be sold year-round, removing an outdated and unnecessary barrier to selling higher blends of ethanol. E15 has a lower RVP than 10 percent blends, as well as lower tailpipe and GHG emissions, so this change furthers EPA’s environmental goal for regulating these emissions.
5. An Open and Free Market for Biofuels
American farmers are the most productive in the world. The fruits of their labor provide the feedstocks to create low-cost, clean-burning ethanol and biodiesel. These renewable fuels play an important role in the U.S. energy supply and can increasingly provide the same benefits for other world economies. Growing exports for U.S. biofuels will provide a much-needed demand boost for famers and biofuels producers. However, the ongoing trade war with China and protectionist policies from the European Union, India, Brazil, and several other countries around the globe have curtailed these vital export opportunities. In addition, these countries can benefit from low-cost octane, cleaner tailpipe emissions and reduced GHG emissions from their transportation sectors. Likewise, U.S. producers should not face unfair competition here at home from illegally subsidized biofuels imports. Only recently, this was the case for biodiesel from Argentina. The next president of the United States should prioritize an open and free market for biofuels as a win-win for the U.S. and foreign nations.
6. Long-term Extension of the Biodiesel and Cellulosic Ethanol Tax Credits
Advanced biofuels such as biodiesel and cellulosic ethanol reduce GHG emissions by 50% or more compared to the fossil fuels they replace. Because these advanced fuels are relatively new, they require ongoing research and development to further increase efficiency and lower carbon emissions. In order to help these new fuels break through the petroleum monopoly, Congress passed a $1-per-gallon tax credit to support biodiesel blenders and a $1.01-per-gallon tax credit to support cellulosic ethanol producers. These credits were meant to incentivize growth and investment in the emerging industry, but Congress has continually allowed them to expire or be held up on an annual basis, creating a cycle of uncertainty for investors and producers. Despite record profits, the oil industry receives seven permanent tax preferences worth billions of dollars annually, the oldest of which dates back over 100 years. In order to secure a level playing field for biodiesel producers and foster growth in the advanced biofuels sector, the advanced biofuels