Renewable fuel standard hits political divide at energy hearing

Source: By Zack Colman, • Posted: Wednesday, July 11, 2012

The renewable fuel standard (RFS) for transportation fuel is becoming another proxy battleground between Republicans and Democrats in the renewable energy debate, as the parties demonstrated Tuesday during a House Energy and Commerce subcommittee on Energy and Power hearing.

Enacted by the Energy Policy Act of 2005, the Environmental Protection Agency-administered RFS requires 36 billion gallons of renewable fuel to be blended into transportation fuel by 2022.

Republicans charge that that type of policy places the government in a position to pick winners and losers in the economy.

Rep. Mike Pompeo (R-Kan.) likened the RFS to the $535 million federal loan guarantee given to the failed solar panel-maker Solyndra, calling the incident “the absolute danger of intervention in the energy market.”

“Why aren’t my constituents screaming for E85 [gasoline with 15 percent ethanol by volume] if it’s such a good thing?” a bellicose Pompeo asked a witness. “You’re talking about a mandate.”

Tom Tanton, executive director of the right-leaning think tank the American Tradition Institute, added, “We need to focus our policies on principles and process, not picking technology.”

Democrats held that policies like the RFS might take adjustment at the start, but ultimately address problems in the long term.

“Every year or two we are in the same exact position we were in two months ago discussing extremely high gas prices,” Rep. Bobby Rush (D-Ill.) said.

RFS proponents also couched the argument in terms of national security and a way to guard against oil market volatility.

With U.S. production of ethanol hitting nearly 14 billion gallons last year, net imports of crude oil and petroleum dropped to about 45 percent of demand, as opposed to 60 percent in 2005, Renewable Fuels Association President Bob Dinneen said during the hearing.

The addition of ethanol into traditional gasoline blends also has reduced wholesale gasoline prices by an average of $1.09 per gallon, Dinneen said, citing a May study by economists at Iowa State University and the University of Wisconsin.

Republicans, environmentalists and traditional oil-and-gas producers have lined up to repeal or change the RFS — all for different reasons.

Environmentalists claim the RFS is a mandate for corn ethanol that has driven up global food prices, and that even cellulosic biofuels — advanced biofuels made from sources such as algae — would create environmental sustainability problems if produced at the commercial scale.

Republican lawmakers and gas firms have pilloried the RFS and wondered aloud why new-found, domestic sources of liquefied natural gas have not garnered more support as a transportation fuel when “we are so adept at discovering and manufacturing” it, as Rep. Joe Barton (R-Texas) put it.

Oil companies contend gasoline already contains a 10 percent ethanol blend; car manufacturers advise against using gasoline with more than a 10 percent ethanol content because of the damage it can do to engines, warning that such activity could violate warranties, GOP-friendly American Petroleum Institute President Jack Gerard said during the hearing.

“The RFS law has become increasingly unrealistic, unworkable and a threat to consumers,” Gerard said.

Much of the RFS-imposed renewable fuel used today has come from corn-based ethanol.

The RFS caps corn-based ethanol production at 15 billion gallons, meaning most of the total must come from other renewable fuel sources. The Energy Information Administration predicts 13.9 billion gallons of ethanol supply this year.

Sources other than biofuels deserve consideration, Rep. John Sullivan (R-Okla.) said in his opening remarks.

“Beyond ethanol and biofuels, there are many other alternative fuels and vehicles, including natural gas, electricity, coal-to-liquids, methanol and flex-fuel vehicles,” Sullivan said.

The potential for cellulosic biofuel to plug that 21 billion-gallon gap is significant, an Agriculture Department official told The Hill on Monday. For example, cellulosic biofuels producers could make use of the millions of acres of trees in the West that can no longer circulate sap as a result of the fungus the Colorado bark beetle injects into those trees.

But potential is worlds away from reality, a distinction Gerard was quick to point out. Cellulosic biofuels get lots of lip service, but no one can produce them at the commercial scale, he noted.

Doing so could become more difficult if Congress strips funding for rural energy programs for biofuels production.

The House Agriculture Committee bill scheduled for a markup Wednesday contains no mandatory funding for energy programs, many of which support bio-refinery construction and operation as well as efforts to commercialize cellulosic biofuels. It also would cut $500 million from energy programs compared with the 2008 farm bill.

To that point, Dinneen argued that the cellulosic biofuels technology already exists — what doesn’t is the funding to take it to the next level.

Removing the RFS would certainly kill much of the development in that industry, Dinneen said. Rolling other fuels into the program might do the exact same by drawing attention and funding away from the biofuels industry for technologies that might not need similar support, he said.

“I think there is certainly a role for some of those nonconventional petroleum fuels,” Dinneen said. “But the RFS is what was designed as a renewable fuel program, and I think it should stay as such.”