Congressional Research Service Publishes The Renewable Fuel Standard (RFS): An Overview

by Kelsi Bracmort (Congressional Research Service; posted by OurEnergyPolicy.org) Congress has expressed ongoing interest in the RFS, particularly the challenges associated with implementing the RFS and with compliance for entities required to use renewable fuels. Some question whether it is time to amend or repeal the RFS, while others contend the best course of action is to maintain the status quo. READ MORE Download Report

Excerpts from Congressional Research Service: The Renewable Fuel Standard (RFS) requires U.S. transportation fuel to contain a minimum volume of biofuel. The RFS—established by the Energy Policy Act of 2005 (P.L. 109-58; EPAct05) and expanded in 2007 by the Energy Independence and Security Act (P.L. 110-140; EISA)—began with 4.0 billion gallons of renewable fuel in 2006 and aims to ascend to 36.0 billion gallons in 2022, with the Environmental Protection Agency (EPA) determining the volume amounts after 2022. However, it appears increasingly unlikely that the United States will meet the total renewable fuel target. EPA administers the RFS and is responsible for several tasks, including evaluating biofuels for RFS program eligibility and establishing the amount of biofuel that will be required for the coming year. Compliance for the RFS is met using a tradable credit system with renewable identification numbers (RINs).

Some stakeholders have concerns about how EPA is administering the RFS. Some of these concerns include EPA’s use of its waiver authority to reduce the volumes called for in the statute, the accuracy of EPA projections of the annual amounts of advanced biofuel that will be produced, and which biofuels are eligible for which part of the mandate, among other things. Congress has expressed ongoing interest in the RFS, particularly the challenges associated with implementing the RFS and with compliance for entities required to use renewable fuels. Some question whether it is time to amend or repeal the RFS, while others contend the best course of action is to maintain the status quo.

The blend wall—the upper limit to the total amount of ethanol that can be blended into U.S. gasoline and still maintain automobile performance and comply with the Clean Air Act—has been viewed by many to be in direct conflict with the biofuel volumes mandated in the RFS.46 Thus far, the largest volume being met under the RFS is for the non-advanced (conventional) biofuel segment of the mandate, and this has been met mainly with cornstarch ethanol blended into gasoline. Due to a variety of factors, ethanol content in gasoline is generally limited to 10% (E10). With a relatively fixed supply of gasoline, the amount of ethanol that can be supplied this way is also limited. If the ethanol content of gasoline for the majority of vehicles remains at 10%, and given current fuel consumption rates, the conventional biofuel portion of the RFS abuts the line of just slightly requiring more ethanol than can technically be blended into gasoline.47

Technically, the blend wall remains a concern, but it may not be as obvious an impediment to immediate fuel consumption as previously considered by some. Indeed, EPA reports “the E10 blendwall is not the barrier that some stakeholders believe it to be.”48 Had the RFS mandates—for both conventional biofuel and advanced biofuel—come to fruition in the form of mostly ethanol, or had fuel consumption decreased further, the blend wall potentially could have led to a more serious discussion about the volume mandates. However, primarily due to the lack of cellulosic biofuel production, more time has been granted to address the blend wall and the scheduled levels of biofuels in the RFS.

Some recent developments could alleviate blend wall concerns in the near term. One option suggested by stakeholders could be to blend higher levels of ethanol into conventional gasoline. In 2010 EPA granted a Clean Air Act waiver that allows gasoline to contain up to 15% ethanol for use in model year 2001 and newer light-duty motor vehicles.49 However, infrastructure and automobile warranty concerns have precluded widespread offering and purchase of E15, gasoline blended with 10.5% to 15% ethanol.50 Widespread use of E15 could potentially postpone the blend wall for a few years.

Another option to address the blend wall would be an aggressive push for the use of ethanol in flexible-fuel vehicles capable of using E85, a gasoline-ethanol blend containing 51% to 83% ethanol.51 There are infrastructure concerns with the use of E85. For example, the number of E85 fueling stations is limited.52 To help address these infrastructure issues, USDA announced $100 million in matching grants in 2015 under its Biofuel Infrastructure Partnership.53 The grants may be used for blender pumps, dedicated E15 or E85 pumps, and new storage tanks and related equipment associated with new facilities or additional capacity.

In examining whether the RFS is well designed to realize its purposes, some have inquired about the challenges in achieving the ambitious RFS targets, given concerns about the slow development of some advanced biofuels. Additionally, past delays in announcing final annual standards by EPA have led to significant uncertainty for biofuel producers, feedstock growers, and refiners. Whether the RFS should be eliminated, amended to address the current challenges in the program, or maintained in its current form is an ongoing question for Congress. A related question is whether the current provisions for EPA to waive various portions of the RFS mandates, as the agency did for 2017, and to “reset” the RFS are sufficient to address the current supply challenges or whether the use of these waivers runs counter to the goals of the program.
The third question relates to some congressional interest in the elimination of the conventional biofuel (e.g., cornstarch ethanol) portion of the mandate. If a segment of the biofuels industry has consistently reached the annual mandate set by Congress, is the mandate still necessary? Some contend that the conventional biofuel segment of the biofuels industry is well established, so it should not require a use mandate. In addition, it has been argued that a demand for conventional biofuels exists regardless of congressional involvement. Others counter that the RFS is needed to help lower GHG emissions and to assure that the biofuels industry continues to have access to a fuel distribution infrastructure that is largely controlled by petroleum interests. READ MORE