The Renewable Fuel Standard: Working as Intended?

Source: By Jessie Stolark, EESI • Posted: Monday, August 15, 2016

With Congress in recess until September, analysts, environmentalists and pundits have returned to a favorite punching bag – the Renewable Fuel Standard (RFS). With a potential omnibus spending package on the table this fall, the oil industry and some environmental groups have raised again the proposition of RFS reform.  Two major claims made by RFS-reformers are that biofuels, especially corn-based biofuels, don’t reduce GHGs, and that the RFS is causing major environmental degradation by increasing corn production. Below, we examine these two claims and take a look at the future of the RFS.

Does the RFS Reduce Greenhouse Gases?

In examining the most up-to-date information on greenhouse gases, it is clear that corn ethanol does reduce GHGs when compared to gasoline, with emissions reductions between 19 and 48 percent, depending on the type of ethanol plant and the technology deployed.  Additionally, advanced and cellulosic feedstocks, like perennial grasses, have the potential to reduce GHGs up to a staggering 115 percent when compared to gasoline.

Lifecycle Assessment

Through lifecycle assessment the amount of greenhouse gases (including carbon dioxide, nitrous oxide, and methane) that are released per unit of fuel are calculated. For biofuels, this includes emissions and/or carbon sequestration as well as impacts to land from the growing of biofuel crops. The Department of Energy’s Argonne National Lab has developed the Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) Model, the most comprehensive, up-to-date lifecycle assessment model for various fuels (including biofuels and petroleum-based fuels).

According to Argonne, first generation ethanol made from corn can reduce life-cycle GHG emissions by 19 to 48 percent.  Agriculture residues (corn stover, wheat and soy stubble and other sources) can reduce life-cycle emissions by 90 to 103 percent, and energy crops such as switchgrass and miscanthus can reduce life-cycle GHG emissions by anywhere from 77 to 115 percent.  This factors in improvements throughout the production of biofuels, including greater energy efficiency, increasing yields per acre, decreasing water and fertilizer inputs, as well as co-products.

It’s also important to note that the oft-cited increase in GHGs from biofuels is based on EPA’s Regulatory Impact Analysis for the RFS from 2010.  Since 2010, better data, continual improvements in lifecycle analysis modeling and a richer understanding of the role of economics in farm decision-making have significantly reduced emission estimates from corn-based biofuels, which are reflected in the GREET model.

RFS’s Impact on Land Use Decisions

Land conversion at the national level is stable. While there are concerns with land use conversions at the local level, additional data is needed.  The RFS is just one of many drivers of land use decisions. It is not the only, or even most important driver; feed demand, crop prices, input prices and other factors must also be considered. Many additional factors, both economic and policy-related, drive a farmer’s land use decisions.

Land Use Change: What Drives Planting Decisions?

Similar to GHG accounting, land use data and modelling has also seen refinements since the RFS’s earliest days.  According to another model developed by Argonne, the Carbon Calculator for Land Use Change from Biofuels Production (CCLUB), land use change estimates due to the RFS have dropped significantly since 2010. One reason is that instead of significant land use expansion to grow more corn, land under cultivation is instead being used more intensively.  Therefore, in the U.S. agricultural system as a whole, the impact of corn ethanol on land use expansion is much smaller than previously calculated.

While crop acreage increased 2 percent between 2006 and 2009, total crop area has fallen from 350 million acres to 311 acres between 1980 and 2011. Land conversion is not limited to agriculture; forest or agriculture land conversion to urban use is occurring rapidly.  In a ten year period, urban lands expanded by 15 percent in the United States.

Land Use Change in the Dakotas

Using the USDA’s National Agricultural Statistics Service (NASS) Cropland Data Layer (CDL), a handful of scientists and environmental groups have argued that there has been a significant amount of conversion from prairie and grasses to corn and soy in the Dakotas that is obscured by the RFS’s ‘aggregate compliance’ mechanism.  Other scientists have argued that CDL is not a good tool to measure land conversions, and that error levels in the CDL are high enough to warrant caution with using this method to measure land conversions.

According to an analysis of CDL appropriateness for land use change measurement by Argonne National Lab, “many of the states (North Dakota, South Dakota) … identifie[d] as experiencing the largest cropland conversions also exhibit the lowest CDL accuracy levels.”  Therefore, while some actual amount of crop land conversions may be occurring, it’s still unclear what the actual rate of conversion may be at the local level.  USDA is currently collecting high-resolution data through the National Agriculture Imagery Program (NAIP), which will hopefully clarify the situation in North and South Dakota.

What role does RFS play in Land Use Decisions?

Pinning land use changes squarely on the RFS is hyperbolic.  In a 2015 survey of 1,026 Dakota farmers conducted by South Dakota State University, the top three factors were: changing crop prices, changing input prices and increased crop yields, with changing weather and climate a distant fourth.  The decreasing acreage covered by the USDA’s Conservation Reserve Program (CRP) program may also be playing a role in land use decisions at a regional level.

One could argue – and many do – that ethanol provides price support to corn, thus affecting land use decisions.  Approximately 35 percent of corn price increases between 2006 and 2012 can be correlated with expansion of biofuels production, according to several studies. However, other impacts on corn prices must be considered as well, such as growing feed demand for a rapid rise in meat consumption globally, input prices, yield improvements and other factors.  Additionally, the role of ethanol co-products in land use is important, particularly distiller’s dried grains with solubles (DDGS), a high-value, high-protein animal feed, as well as corn oil.  The net effect of the production of co-products is an offsetting of the need to devote acres for feed and oil production.

The Role of Conservation in Land Use Decisions

Historically, the Dakotas have been a heavy user of the USDA’s Conservation Reserve Program (CRP), a program that pays farmers to remove ecologically sensitive land from production.  Acres expire from CRP every 10 to 15 years, prompting a decision from farmers on future use.  According to South Dakota State University, CRP enrollment decreased from 5.0 million acres to 3.8 million acres in a five year period between 2006 and 2011 in the region.  This is likely due to a combination of expiring CRP acres and fewer acres made available for enrollment under the program going forward.

Conservation methods on the field are key – to making both agriculture and biofuels sustainable in every sense.  Not just from a GHG perspective, but also for water quality and soil quality.  Therefore, it is troubling that CRP levels have fallen to historic lows in the 2014 Farm Bill, from 37 million acres, in 2007, to 24 million acres in 2016.  Currently, interest in CRP outstrips demand, with demand exceeding availability by 1.4 million acres. Additional conservation measures, like the USDA’s Sodsaver provision, which reduces crop insurance for conversion of native prairie acres to row crops, could also be expanded in future Farm Bills.  Ensuring a stronger Conservation Title in the 2018 Farm Bill is essential to increasing conservation measures.

The Future of the RFS

As of 2016, corn ethanol is the primary biofuel produced in the United States, but the industry is at an inflection point.  Under the RFS, corn ethanol is capped at 15 billion gallons, which the U.S. industry is currently close to producing.  Going forward, the rest of the 36 billion gallons of the RFS will have to come from other sources.

These advanced and cellulosic fuels are from feedstocks such as wastes and purpose grown crops – and must meet GHG reductions of 50 to 60 percent, respectively. According to the Department of Energy’s 2016 Billion Ton Study, most of the biofuels feedstocks in the future will come from agricultural residues and energy crops, like perennial grasses, short-rotation trees, and algae. Wastes, such as municipal solid waste, organic waste and wood waste, will also play a role in fuel volumes in the future.

Bottom Line

The RFS is working as intended.  It has helped create a $369 billion U.S. bioeconomy and create 4 million U.S. jobs, reduce greenhouse gases by 400 million tons annually and replace 300 million gallons of petroleum, according to the USDA.  Efficiency improvements in the field and at the biorefinery have greatly boosted ethanol’s energy balance.

In the advanced and cellulosic fuels space, developments have happened more slowly than expected, but there are now three commercial scale cellulosic plants in the United States, and many companies are producing biobased chemicals and products. Globally, there is huge interest in these fuels and technologies.  Additional investments are needed in energy crops – and federal investments are key to expanding the growth of these feedstocks.

While there may be some stumbling blocks along the way for the RFS and sustainable biofuels, it doesn’t warrant throwing the baby out with the bathwater.

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