The federal biofuel mandate “has failed to achieve its policy goals while imposing significant other costs on consumers,” according to a new report.
Americans paid out nearly $77 billion in additional fuel costs over the last 10 years due to the Renewable Fuel Standard (RFS) created under the Bush administration, Right-leaning American Action Forum found.
“After more than a decade, research indicates that the RFS has failed to achieve its policy goals and imposed burdens on the economy,” reads AAF’s energy director Philip Rossetti ‘s report shared with The Daily Caller News Foundation.
“If biofuel was economical, refineries would use it even without a government mandate,” Rossetti wrote.
Congress created the current RFS program in 2007, mandating refiners blend ever-increasing amounts of biofuels, mostly from corn, into the fuel supply. The program was intended to reduce U.S. reliance on imported fuel and help the environment.
Instead, the RFS “functions as a subsidy for biofuel producers — mostly corn growers — creating an economic distortion that raises the costs of food and fuel,” Rossetti wrote, noting “the best reform to the program would be to eliminate it entirely.”
RFS costs have fallen particularly hard on refiners, who are forced to buy regulatory credits to meet mandatory blend rates. Purchasing these RINs can cost millions each year.
Corn state lawmakers lashed out at President Donald Trump’s administration for issuing waivers to about two dozen refineries, exempting them from blending requirements to ease compliance woes. Biofuels interests have opposed almost any RFS changes the Environmental Protection Agency (EPA) suggested in 2017.
But EPA began issuing waivers after Philadelphia Energy Solutions, the largest East Coast refiner, filed for bankruptcy, blaming the RFS. The biofuels industry pushed back against claims the RFS helped bankrupt the refiner.
“Blaming the RFS is a better story than admitting strategic mistakes related to crude oil markets, but it’s a smokescreen,” Advanced Biofuels Business Council’s R. Brooke Coleman said in a statement on the bankruptcy.
The Trump administration has been working with both sides of the RFS on a compromise. Not all the details are clear, but Trump would approve the use of E-15 fuel year-round — that’s gasoline with a 15 percent ethanol blend, the president told reporters on April 12.
However, it’s only the latest battle in the political war over the RFS. Environmentalists, anti-hunger groups, livestock farmers, vehicle manufacturers and more oppose the RFS as it currently stands.
But probably the biggest knock against the RFS is the program has done little to enhance U.S. energy security, according to Rossetti. Booming shale oil production has cut the lion’s share of foreign imports, not ethanol.
“The political rationale — energy security — is no longer relevant over a decade later,” Rossetti wrote.
“But the core problem has remained the same since the program’s inception: it could never hope to substitute for the efficiency of the market in rewarding the energy sources with the lowest cost,” Rossetti noted.
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