- The U.S. Environmental Protection Agency (EPA) should:
- continue growing the use of American biofuels through proper administration of the RFS.
- Update its outdated assessment of bioethanol’s lifecycle emissions.
- Approve pending registrations for cellulosic biofuel from kernel fiber, as well as other pending biofuel pathways like corn oil from bioethanol wet mills and novel pathways using carbon capture, utilization, and storage (CCUS).
- Sustain its correct economic assessment of small-refinery exemption (SRE) eligibility.
- Congress should:
- Approve the Fuels Parity Act, which would allow bioethanol derived from corn starch to qualify as an advanced biofuel under the RFS.
- Approve the Adopt GREET Act, which would require EPA to update its lifecycle analysis model to account for all of the emissions reductions achieved by using bioethanol.
What Is the Renewable Fuel Standard?
The Renewable Fuel Standard (RFS) was first enacted in 2005 as part of the Energy Policy Act. It was then expanded in 2007 with the passage of the Energy Independency and Security Act. It sets the number of gallons of renewable fuels (like biofuels) that must be blended into the nation’s total fuel supply each year. The RFS remains one of America’s most successful clean energy policies, reducing carbon emissions, offering consumers more affordable options at the pump, and delivering greater energy security for more than 15 years.
Until recently, Congress provided the Environmental Protection Agency (EPA) with specific statutory targets for U.S. biofuel blending volumes. In 2023, however, EPA was required on its own to establish these Renewable Volume Obligations (RVOs) through the “Set.”
In the most recent rule, finalized in June 2023, EPA set the highest ever blending obligations at 20.94 billion gallons of renewable fuel to be blended into the fuel mix in 2023, 21.54 billion gallons in 2024, and 22.33 billion gallons in 2025. Those figures include 15 billion implied gallons of conventional biofuels (like corn ethanol) for each year, as well as an increasing number of gallons of advanced and cellulosic biofuels.
How does the RFS work?
Once EPA has finalized the RVOs for any given year, compliance with those RVOs is calculated through the use of renewable identification numbers, or RINs. As EPA puts it, RINs are the “currency” of RFS compliance. Renewable fuel producers (e.g., ethanol and biofuel producers) assign RINs to the fuel they produce. When obligated parties (refiners and fuel importers) buy the renewable fuel they need to blend, they also buy the RINs assigned to that fuel when it was produced. Once the fuel is blended, the RINs are separated from the fuel itself, and then retired by the blending party. Those retired RINs are used to demonstrate compliance with the RFS.
These transactions can be simple and linear, as described above, or far more complex (i.e. RINs can also be separated, bought, sold, and traded among obligated parties in order to comply without actually blending the fuel themselves), but the gist is that the number of RINs generated, bought, and retired in any given year should align with EPA’s established RVOs.
Since the RFS was created, however, oil refineries and the entire oil industry more broadly have fought to avoid complying with their blending obligations through the use of near-constant litigation. Growth Energy has rigorously defended the RFS in the courts against these challenges, which illustrate the stakes involved when it comes to the RFS—if its impact on the market were negligible, or if its continued functioning had no impact on refiners’ profits, the oil industry would’ve abandoned its multi-decade crusade against the program years ago. That they haven’t is a testament to the RFS’ power to reduce our reliance on oil to fuel America’s on-road transportation sector.
What does a robust RFS mean to the economy?
Beyond its environmental achievements as a renewable energy program, the RFS has also succeeded as an engine of broadly beneficial economic activity. It has stimulated demand for corn among ethanol producers to the benefit of rural communities across the Midwest; it has driven business expansion and job creation at fuel retailers nationwide; and it has lowered fuel costs for American drivers while improving internal combustion engine performance, saving consumers money at the pump and at the repair shop.
Perhaps most importantly, the RFS serves as a bulwark against petroleum’s dominance in the liquid fuels market. By increasing the percentage of clean-burning, American-made biofuels in the fuel mix, the RFS makes the U.S. more energy secure and less susceptible to the worst effects of global market volatility.
What Impact Would Growth Energy’s Policy Priorities Have on Consumers, the Economy, or the Environment?
A strong RFS that recognizes biofuels’ power to reduce emissions and puts more biofuels in the nation’s fuel mix would contribute to lower costs for consumers, lower greenhouse gas (GHG) emissions, better air quality, and greater energy independence.