10 Policy Proposals to Improve the Renewable Fuel Standard

Source: BY SCOTT MCKEE, STUART ILER, Bipartisan Policy Center • Posted: Wednesday, November 26, 2014

In the time since the Renewable Fuel Standard (RFS) was first passed into law in 2005 (and later expanded in 2007), domestic biofuels production has risen and renewable fuels have increased as a percentage of the total U.S. transportation fuels supply. At the same time, persistent challenges in courts and in the implementation of the enacting laws have complicated the RFS, keeping it at the forefront of energy policy discussions. The Environmental Protection Agency’s (EPA) additional delay of the 2014 rule and the associated compliance volumes is a further indicator that improvements to the RFS are needed.

For some time, there have been strong advocates on both sides of the debate calling for either outright repeal of the RFS or holding firm on the existing requirements. BPC chose to explore a middle ground where we think tangible progress can be made to reform—but not repeal—the RFS and put the program on stable footing. So we set off—working with a group of experts and stakeholders—in pursuit of both regulatory and legislative policy options to improve the RFS.

Our final report, which will contain an inventory of 40 policy options (along with detailed discussions on each), will be out later this winter. In the meantime, we thought it would helpful to start the conversation with 10 high-level ideas, which taken together help to support rural economic development, increase good governance and promote development of advanced biofuels (see below). Our inventory doesn’t represent a consensus among our experts and stakeholders, nor are they recommendations by BPC. Instead, they are carefully considered and well-researched options that we hope can help us move beyond the rhetoric and build a stronger alternative transportation fuels program in the United States.

Given the complexity of the RFS, the inventory has been designed to address biofuels challenges at multiple scales, across many facets of the program, through multiple mechanisms and over varying periods of time.

In all, no one policy option will serve as a single solution to all of the challenges of the RFS; options must be combined—and considered in tandem—if they are to meet one or more desired objectives. In fact, some ideas may contradict others, and therefore policy priorities and goals must be considered when advocating for any particular package of options.

10 Policy Ideas from BPC’s Upcoming Report on Improving the RFS

  • Create equivalence values based on factors beyond energy density, such as rural development and greenhouse gas performance.
  • Create an education campaign to inform consumers about new fuels, flex-fuel stations and which engines can handle which blends.
  • Create a mandate for ethanol based on percentage of consumption, in addition to the volumetric RFS mandate categories.
  • Implement automatic consequences if EPA fails to meet statutory deadlines, especially for setting the annual volumes.
  • Create a longer-term period and increased amount for banking and borrowing of RINs.
  • Increase data availability, such as that related to EMTS, RIN prices, RIN trades, E15, E85 and other fuel blends.
  • Standardize the technology pathway approval process to better align with the current processes in other locations, such as Canada and the European Union.
  • Create and/or expand incentive programs—such as government R&D, grants, loan guarantees or tax incentives—for the production of advanced biofuels, with long-term stability that phases out slowly.
  • Remove the Federal Trade Commission labeling requirement for infrastructure-compatible drop-in fuels if they meet the petroleum specification.
  • Give the Department of Defense longer-term procurement ability.