A policy intended to promote American energy independence has failed, as the U.S. has gone from being a net exporter of biodiesel and renewable diesel to being a net importer of the fuels.
The Energy Information Administration (EIA) reports that imports of two biomass-based diesel fuels –biodiesel and renewable diesel — increased 761 percent in just one year primarily due to the Renewable Fuel Standard (RFS), which requires blending ever increasing amounts of biofuels into the U.S. fuel supply.
“Last year, total U.S. imports of these two varieties of biomass-based diesel fuel reached 525 million gallons, compared to 61 million gallons in 2012,” EIA reports, adding that federal policies and access to growing biofuel production abroad have driven the huge increase in imports.
“As a result, the United States switched from being a net exporter of biomass-based diesel in 2012 to a net importer in 2013 by a wide margin,” EIA adds.
The main driver of the growth in biomass-based diesel demand has been the RFS, which increased the amount of biofuels to be blended into the fuel supply from 15.20 billion gallons in 2012 to 16.55 billion gallons in 2013.
The RFS increased biomass-based diesel blending target from 1 billion gallons in 2012 to 1.28 billion gallons in 2013. Advanced biofuel blending requirements rose from 2 billion gallons to 2.75 billion gallons over that same time period. Biodiesel and renewable diesel qualify for both of these categories.
Government-driven demand, combined with the help of a $1 per gallon biodiesel tax credit, have boosted U.S. production 35 percent from 2012 to 2013. But domestic production was not enough to meet federal mandates, thus increased imports were required. EIA also notes that because the biodiesel tax credit wasn’t extended through 2014, imported biodiesel could play a bigger role this year in meeting federal blending targets.
The RFS was originally passed in 2005, but was expanded in 2007 to include a biodiesel mandate. The idea received bipartisan support, but is now under fire for not delivering on the promised benefits.
“This is just another reason why Washington should get the hell out…and stay the hell out…of anything having to do with energy,” Dan Kish, vice president of policy at the free-market Institute for Energy Research, told the Daily Caller News Foundation.
“Everything they touch turns to excrement,” Kish said.
The RFS requires 36 billion gallons of renewable fuels to be blended into the U.S. fuel supply by 2022. But last year the RFS came under fire from refiners who say that they were reaching the limits of what could be safely blended into the fuel supply — the so-called “blend wall”.
Increasing federal fuel economy standards, the RFS and a lagging economy decreased gasoline demand in the U.S., meaning refiners began producing less of it. But the RFS required more and more biofuels to be blended into the fuel supply, meaning refiners faced rising renewable fuel credit prices and safety concerns from blending ethanol at higher than a 10 percent ratio.
“[The Environmental Protection Agency] shouldn’t try to micromanage ethanol mandates based on slight changes in gasoline demand forecasts,” said Bob Greco, downstream director at the American Petroleum Institute.
“These mandates set the minimum amount of ethanol that must be used each year—not the maximum,” Greco said. “So it’s better to err on the side of caution with the final rule rather than force more ethanol into gasoline than is safe.”