Advanced BioFuels USA

By Ed Hubbard (Renewable Fuels Association)  …  At APEC (Asia-Pacific Economic Cooperation forum), I found a delegation of countries that weren’t just committed to biofuels, but eager about the future and promise they held for those countries’ domestic economies, energy security, environment and air quality.  I found an audience not only eager to hear my thoughts about what is needed to expand the production and use of biofuels like ethanol, but looking closely at the U.S. for guidance on policy structures, tax incentives, blend dynamics and fuel additive economics.

One example of where I was surprised to hear interest among APEC member countries is in the area of policy structure.  As part of my presentation on how to build a successful domestic biofuel industry, I focused a great deal of attention on the impacts following the passage of the Renewable Fuel Standard.  As I explained to the APEC delegates, while biofuel use and production has been incentivized in the U.S. since the early 1970s, it was not until the RFS was created and implemented that the U.S. saw dramatic growth in the production and use of ethanol by the public. While ethanol production and use grew gradually from 1974 to 2005, that growth turned exponential after the RFS was established in 2005 and expanded in 2007. It was the RFS that helped to break open the long-held monopoly that oil and gas held on the U.S. fuel market.  And, following the implementation of the RFS, ethanol production and use in the U.S. grew by nearly 400% over the next ten years, rising from 4 billion gallons to 14.7 billion gallons today.

While it is very common to hear criticisms in the U.S. about the RFS, blend mandates, purported blendwalls and calls from U.S. policymakers to reform the program, that was not the response that I received to my briefing to APEC on the RFS.  On the contrary, the APEC delegates were very interested in hearing about the RFS and how a program like that could be mirrored in their own countries.  Unlike the RFS critics in the U.S. who are looking to preserve the status quo for transportation fuels in America, these APEC members see a completely successful and revolutionary program that is accomplishing a number of important national goals: rural and agricultural revitalization, environmental and air quality improvements, and energy security.  As it turns out, while looked at by some in the U.S. with dismay, the RFS program is really viewed by the world as the gold standard as it relates to biofuel policies.

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By firmly enforcing blend targets, a country can encourage expansion in the domestic production of biofuel by giving investors certainty in knowing that there will be a market for the fuel.  By refusing to waive blend targets and importing to meet any biofuel deficit, the country can show that it is serious and committed to using biofuels. Producers and investors will respond by making the investments necessary to expand domestic biofuel production capacity.