Celebrating a Decade of Success: The RFS Turns 10!

August 10, 2015

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(Renewable Fuels Association) This Saturday marks 10 years since the Energy Policy Act of 2005 (EPAct) containing the original Renewable Fuel Standard (RFS) was signed into law by President George W. Bush. The first RFS set America on a path toward a cleaner, more energy-independent future by requiring ever-increasing amounts of ethanol to be blended with gasoline. The Renewable Fuels Association (RFA) has compiled a report examining the impact of the RFS over the past decade on the economy, job creation, agriculture, the environment, fuel prices, petroleum import dependence and food prices.

As it made its way through Congress, the legislation passed the Senate on a vote of 85–12 and the House on a vote of 249–183. In calling for ethanol production of 4 billion gallons in 2006, with an increase to 7.5 billion gallons by 2012, the original RFS signaled a clarion call to the ethanol industry and financial community that the demand for ethanol was no longer uncertain, and it allowed the renewable fuels industry to grow with confidence.

During remarks at the signing ceremony, which took place at the Sandia National Laboratory in Albuquerque, New Mexico, President Bush noted that the bill he was signing into law would “…lead to greater diversity of fuels for cars and trucks. The bill includes tax incentives for producers of ethanol and biodiesel. The bill includes a flexible, cost-effective renewable fuel standard that will double the amount of ethanol and biodiesel in our fuel supply over the next seven years. Using ethanol and biodiesel will leave our air cleaner. And every time we use home-grown fuel, particularly these, we’re going to be helping our farmers, and at the same time, be less dependent on foreign sources of energy.”

In reflecting on the political battles leading up the passage of EPAct, RFA President and CEO Bob Dinneen noted, “In those days, the American Petroleum Institute (API) wasn’t fighting the ethanol industry with every breath. Rather, oil companies recognized that ethanol was an attractive substitute for MTBE, a petroleum-derived oxygenate and octane enhancer that was contaminating drinking water supplies across the country. Thus, the original coalition promoting a 7.5 billion gallon mandate for ethanol actually reflected a partnership between RFA and API!

“The other big difference was that all of agriculture supported the RFS. Then, even the livestock folks recognized that $2 corn was not sustainable, and that a value-added market for corn farmers would assure a healthy rural economy and ample supplies for all by driving innovation and efficiency at the farm. The RFS has done just that. On average, one acre of corn today produces 25 bushels more than that same acre did in 2005, and total corn production has grown roughly 3 billion bushels without increasing the amount of cropland planted. Further, the higher corn prices seen recently have allowed government subsidies to plummet and encouraged investment in new technologies and equipment that has helped all of agriculture without impacting food prices.”

Dinneen concluded: “The big winner in the RFS, however, has been consumers hit by rising gas prices at the pump and concerned about the impacts of greenhouse gases on the planet. By driving investment and innovation in corn ethanol production, the RFS has resulted in ethanol becoming the lowest cost liquid transportation fuel and octane enhancer in the world. Independent analyses have pegged consumer savings from the RFS between $0.50 and $1.50 per gallon. And while much attention is being placed on the Obama Administration’s new power plant rulemaking, it’s important to keep in mind that the first meaningful greenhouse gas reduction program was the RFS, which has resulted in the avoidance of nearly 40 million metric tons of carbon dioxide (CO₂) emissions in the past year alone—the equivalent of removing 8 million passenger cars from the road, or shuttering 10 average-sized coal-fired power plants.”

According to RFA’s analysis, since 2005:

The number of corn ethanol plants has more than doubled.
Annual ethanol and co-product production has more than tripled.
Ethanol-related jobs have more than doubled.
Though total U.S. cropland has not increased, the United States is producing 3 billion bushels of corn more than in it was in 2005.
The United States is producing nearly 25 bushels per acre more today due to higher yields.
Corn prices have nearly doubled their average price.
The values of crops and livestock have both increased by about 60%.
Red meat and poultry production is up nearly 10%.
U.S. forestland has increased and deforestation in the Amazon has fallen dramatically.
Carbon monoxide and ozone levels are down significantly, while transportation-related carbon dioxide levels have fallen too.
Though the U.S. still imports more than 40% of its crude oil, imports from OPEC have been cut in half. Imports of finished gasoline have virtually disappeared.
World food prices have advanced at an annual average rate of just 2%, in line with, or lower than, long-term historical trends.
Current U.S. food inflation rates have decreased.