Policy Documents

Research & Commentary: Renewable Fuel Standard

March 18, 2013

The U.S. Environmental Protection Agency’s Renewable Fuel Standard (RFS), created by the Energy Policy Act of 2005 and expanded in 2007 through the Energy Independence and Security Act, requires 36 billion gallons of renewable fuel be blended into gasoline and diesel fuel by 2022. The program also requires American agriculture/energy producers to generate 1.28 billion gallons of biodiesel in 2013, a 28 percent increase from 2012.

The RFS was mandated on the pretext of reducing carbon dioxide emissions and U.S. dependence on foreign oil. Ethanol industry representatives even claim the blends lower gas prices. That is contradicted by a recent study from the Massachusetts Institute of Technology that concluded ethanol does not reduce the cost of gasoline because ethanol possesses only two-thirds the energy density of gasoline and thus has lower gas mileage than non-blended fuel.

RFS proponents also overlook the fact that because gasoline prices are primarily dependent on crude oil costs and crude oil is used for myriad other products besides gasoline, many of which have significantly greater demand growth than gasoline (where demand is always flat), the RFS has practically zero capacity to ever reduce oil use or oil imports.

During the production phases, biofuels also require by far the greatest amount of land compared to other energy sources. According to the National Academy of Sciences, this heavy land use disrupts soil’s future potential to store carbon, to the point that it can fully offset the carbon reductions accrued from displacing the use of petroleum-based fuels for transportation.

With the current boom in domestic oil and natural gas production due to hydraulic fracturing and horizontal drilling technologies, which are proving to have tremendous carbon reduction capacity of their own, the renewable fuel standard has become a solution in search of a problem. Congress should repeal this mandate or at least waive the higher 2013 biodiesel requirement, which industry representatives say is impossible to meet.

The following documents provide additional information about ethanol and the renewable fuel standard.

 

Ten Principles of Energy Policy
http://heartland.org/policy-documents/ten-principles-energy-policy
Heartland Institute President Joseph Bast outlines the ten most important principles for policymakers confronting energy issues, providing guidance to help withstand ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography.

Ethanol
http://www.fueleconomy.gov/feg/ethanol.shtml
The U.S. Department of Energy defines ethanol and states what the department recognizes as the considerable advantages and disadvantages of blending it with motor fuel gasoline. 

National Academy of Sciences: Renewable Fuel Standard Goals Unlikely To Be Met
http://www.nap.edu/openbook.php?record_id=13105&page=4
In a report evaluating the economic and environmental effects of the renewable fuel standard, the National Academy of Sciences finds the RFS “may be an ineffective policy for reducing global GHG emissions” because land conversion for biofuel production involves vegetation removal, which disrupts future potential to store carbon in soil or biomass, thus offsetting any greenhouse gas benefits gained by displacing traditional fuels. 

Renewable Fuel Standard (RFS)
http://www.epa.gov/otaq/fuels/renewablefuels/
The U.S. Environmental Protection Agency (EPA) explains the renewable fuel standard program, which currently requires 36 billion gallons to be blended into transportation fuel by 2022. 

MIT Study: Ethanol Doesn’t Reduce Gasoline Prices
http://news.heartland.org/newspaper-article/2012/09/12/mit-study-ethanol-doesnt-reduce-gasoline-prices
Claims from the ethanol industry that ethanol blending reduces gasoline prices are contradicted by economics professors at the Massachusetts Institute of Technology, who conclude that not only does ethanol have no such effect, it also contains 33 percent less energy than gasoline, so engines need more of it to power a vehicle the same distance. 

Challenges to the Transportation, Sale, and Use of Intermediate Ethanol Blends
http://www.gao.gov/products/GAO-11-513
The U.S. Government Accountability Office reports a federally funded study found the effect of ethanol-blended gasoline was to “reduce a vehicle’s fuel economy (i.e., fewer miles per gallon) and may cause older automobiles to experience higher emissions of some pollutants and higher catalyst temperatures.” 

Could Biofuel Policies Increase Death and Disease in Developing Countries?
http://heartland.org/policy-documents/could-biofuel-policies-increase-death-and-disease-developing-countries
A paper published in the Journal of American Physicians and Surgeons finds policies encouraging the production and use of biofuels exacerbate global poverty. 

The Federal Government’s Biodiesel Mandate Ensures Higher Prices All Around
http://www.cato.org/publications/commentary/federal-governments-biodiesel-mandate-ensures-higher-prices-all-around
Cato Institute adjunct scholar Robert Bradley Jr. explains why the renewable fuel standard, and particularly the new 2013 standard, will drive up prices at the pump and at the grocery store. He concludes the mandate should be scrapped. 

Energy Regulation in the States: A Wake-up Call
http://www.instituteforenergyresearch.org/pdf/statereport.pdf
The Institute for Energy Research lists state-by-state data on several energy regulations, including which states require gasoline to be mixed with renewable fuels.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Environment & Climate News Web site at http://news.heartland.org/energy-and-environment, The Heartland Institute’s Web site at http://www.heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org

If you have any questions about this issue or The Heartland Institute, contact Heartland Institute Policy Analyst Taylor Smith at tsmith@heartland.org or 312/377-4000.