Renewable Fuel Standard mandate should end in 2022

Source: By Rep. Kevin Cramer (R-N.D.), The Hill • Posted: Friday, September 16, 2016

The freedom of the open road is only a dream without affordable, reliable transportation fuels necessary for modern life. Such fuels are truly the lifeblood of our economy. Unfortunately, poorly crafted government policies threaten to drive up prices at the pump.

The federal biofuel mandate, called the Renewable Fuel Standard, or RFS, has successfully diversified America’s fuel supply and advanced the development of a domestic renewable fuel industry, as well as thousands of jobs. The Environmental Protection Agency’s (EPA) impending takeover of the program threatens higher consumer costs that will disproportionately impact America’s poorest citizens. It’s time for Congress to act to prevent government overreach by allowing this outdated energy mandate to end.

The RFS was created in 2005 and expanded in the Energy Independence and Security Act of 2007, requiring America’s gasoline and diesel supply be mixed with 36 billion gallons of biofuel by 2022. The global energy landscape looked significantly different at that time. There was talk of energy scarcity and the need to reduce our reliance on foreign oil. The federal government was also projecting gasoline consumption would increase at a healthy pace. As is often the case, projections deviated far from reality.

A recession, a sluggish economy and new fuel economy standards have significantly reduced motor fuel demand. The U.S. Energy Information Administration estimates Americans will consume 142 billion gallons of gasoline this year, nearly 20 billion gallons less than projected in 2007. This situation prevents the mandated volume of biofuel from being blended into the fuel supply without risking damage to certain cars, fuel pumps and small engines. Additionally, innovative technology has made America the world’s largest producer of oil and natural gas, surpassing both Russia and Saudi Arabia. With my home state of North Dakota leading the way, hydraulic fracturing enabled our nation to produce 9.4 million barrels per day of crude oil last year. The era of scarcity is over.

While the RFS has contributed to our energy abundance, if left unchanged, its progress threatens to be reversed. After 2022, the EPA has the authority to set its own mandate. This is not good for core ethanol producers or consumers. The law envisioned that cellulosic biofuel from non-food feedstocks would eventually make up the brunt of the RFS mandate. However, since it is significantly more expensive than corn ethanol, more than 4 billion gallons less cellulosic biofuel is being produced than what the law requires.

Unfortunately, the EPA could force these more expensive biofuels onto consumers after 2022 through a program like California’s Low Carbon Fuel Standard. California regularly has the nation’s highest gas prices, and a Boston Consulting Group study concluded compliance with the program could cost “between 33 cents per gallon and $1.06 per gallon by 2020.” Such high fuel costs will disproportionally impact lower-income Americans, who spend larger percentages of their income on energy.

Fortunately, Congress has the opportunity to choose a better path. The refining and ethanol industries have both previously stated that America’s fuels supply will contain 10 percent ethanol without a mandate. As auto manufacturers continue producing more vehicles capable of running on fuels with higher concentrations of ethanol, consumers will choose these fuels more often when it is economical to do so. To further its availability, we need to remove EPA Reid vapor pressure limitations on blends greater than E10. A bipartisan bill I’m co-sponsoring, H.R. 1736, extends a Clean Air Act Reid vapor pressure waiver for E10 to blends greater than E10, such as E15 or E85 during the summer season.

No environmental argument exists for not extending this waiver to higher ethanol blends. More efficient vehicles manufactured to meet more stringent fuel economy standards will need more octane, providing another market venue for octane-rich ethanol. The market has evolved to a point where consumer choice can now best determine our nation’s fuel supply.

The RFS has worked. It has helped make America the world’s largest biofuel producer and created thousands of jobs in the heartland. However, Congress should pass a law sun-setting the program in 2022, when the volume requirements written into the program end. Doing so will stop a successful policy while it is ahead and keep government bureaucrats out of Americans’ gas tanks.

Cramer has served in the House of Representatives since 2013, where he is a member of the House Energy and Commerce Committee. Prior to his election to Congress, he was a North Dakota public service commissioner for nearly 10 years.