Government Witnesses Provide Overview of Renewable Fuel Standard Implementation

June 26, 2013

WASHINGTON, DC – The Subcommittee on Energy and Power, chaired by Rep. Ed Whitfield (R-KY), today continued its review of the Renewable Fuel Standard (RFS) with a hearing featuring testimony from the government agencies that play a role in implementing the statute: the Environmental Protection Agency (EPA), the Energy Information Administration (EIA), and the Department of Agriculture (USDA). Today’s hearing followed a series of bipartisan white papers issued by the committee examining a number of emerging concerns with the current RFS system, specifically in light of changes to the overall energy landscape in the past five years.

“This is the committee’s first hearing specifically devoted to the RFS since the program was last revised in 2007,” said full committee Chairman Fred Upton (R-MI). “The purpose of this initial hearing is essentially to perform a check-up on the RFS – what has gone according to plan and what has not. No policy is perfect, especially one that is now more than five years old. It’s time to assess the RFS in light of what we now know.”

"The landscape has changed since the RFS was last revised in 2007 and there are policy assumptions from then that differ from the realities of 2013,” added Chairman Whitfield. “We can now look back on several years of practical experience with the RFS, and it is time to ask what that experience has taught us. It is also time to review the RFS as we continue to implement its increasing targets.”

Members and witnesses discussed several implementation challenges and issues that have emerged since the RFS was last revised, including blend wall and fuel compatibility issues, impacts of the RFS on energy markets and the agricultural sector, and environmental concerns.

Joseph Glauber, Chief Economist at the USDA, described the effects of the RFS on U.S. corn production. “Corn ethanol production increased dramatically over the past decade, from just over 2 billion gallons in 2002 to almost 14 billion gallons in 2011,” said Glauber. “Driven by a combination of favorable market forces and government biofuel policies, including the RFS, the increase has spurred corn production and corn use for ethanol and has been one of the factors in the recent grain price boom and overall improvements in farm balance sheets including record farm incomes over the past few years.”

Christopher Grundler, Director of the Office of Transportation and Air Quality at EPA, explained that ethanol will likely continue to play a leading role in RFS implementation but warned that refiners may soon hit the “blend wall.” “Both ethanol and non-ethanol biofuels can be used to meet the RFS requirements; however ethanol has and will likely continue to be the predominant renewable fuel in the market for the near and foreseeable future,” said Grundler. “As the volume requirements of the RFS program increase, it becomes more likely that the volume of ethanol projected to meet those requirements will exceed the volume that can be consumed in the common blend ratio of 10 percent ethanol and 90 percent gasoline, referred to as E10.”

EIA Administrator Adam Sieminksi also suggested that RFS targets would not be achievable with current ethanol blends due to demand challenges and the lack of alternative biofuels. He stated, “The RFS program is not projected to come close to achievement of the legislated target that calls for 36 billion gallons of renewable motor fuels use by 2022. Substantially increased use of biofuels can only occur if they can be used in forms other than the low-percentage blends of ethanol and biodiesel that account for nearly all of their current use. The implicit premise that cellulosic and other advanced biofuels would be available in significant quantities at reasonable costs within 5 to 10 years following adoption of the 2007 RFS targets has not been borne out.”

Upton concluded, “The white papers and having today’s hearing have gotten the discussion off to a positive start. I look forward to working with all of the members of this committee in the coming weeks as we continue our oversight and work toward addressing the very real issues that implementation of the RFS presents going forward.”

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