Implementation of the federal Renewable Fuel Standard (RFS) has created problems that require congressional attention 10 years after the 2005 Energy Policy Act (EPACT) established it, witnesses generally told a joint hearing of two US House Science, Space, and Technology subcommittees.
But they disagreed on their recommendations, which ranged from adjusting provisions under EPACT and the 2007 Energy Independence and Security Act (EISA), which expanded RFS quotas, to repealing the entire statute.
"The RFS is an egregious perversion of the free market," Environment Subcommittee Chairman Jim Bridenstein (R-Okla.) said in his opening statement at the Nov. 3 hearing. "Instead of a transportation fuel market driven by consumer demand, we are stuck with a complex mandate based on outdated assumptions about gasoline demand, environmental impact, and technological readiness. Each year, the RFS requires still higher volumes of renewable fuel which now exceed the volumes that can be accommodated given current gasoline demand," he said.
It also is increasingly apparent that consumers are ill-equipped to make smart choices about new types of gasoline entering the marketplace, Oversight Subcommittee Chairman Barry Loudermilk (R-Ga.) said in his opening statement.
He cited recent Outdoor Power Equipment Institute research that found most people choose fuel based on price without regard to posted warning labels, and unwittingly could choose formulations that damage their equipment.
Areas of concern
RFS concerns that have been raised include whether complying with the standard will be feasible, whether it will increase prices for food and transportation fuels, and whether it will lead to the intended reductions in greenhouse gas emissions, one witness told members of the two subcommittees.
Rising renewable fuel quotas under EISA would be very hard to meet in future years because of obstacles relating to the supply of cellulosic biofuels and the amount of ethanol that older vehicles are said to be able to tolerate, Terry Dinan, a senior advisor at the Congressional Budget Office, said in his testimony.
"Fuel suppliers have had trouble meeting the annual requirements for cellulosic biofuels because making such fuels is complex, capital-intensive, and costly," he explained. "Although production capacity is expanding, only a few production facilities are currently operating. The industry's capacity in coming years is projected to fall far short of what would be necessary to achieve the very rapid growth in the use of cellulosic biofuels required by EISA."
Dinan said while ethanol is the most common form of renewable fuel, adding increasing volumes of it to the US motor fuel supply could be difficult. With most gasoline sold in the US being a 10% ethanol (E10) blend, the maximum concentration feasible to avoid corrosion damage to older vehicles, EISA's increasing volume requirements, combined with falling demand, would have to rise above the projected "blend wall" and potentially increase to about 25% by 2022, he said.
Dinan also said EISA mandates for cellulosic biofuels are so much greater than the industry's projected capacity that EPA probably will continue to reduce the mandate every year, rather than impose large fines on fuel suppliers that cannot meet the requirement because the fuels are not available.
"However, granting fuel suppliers a waiver for cellulosic biofuels is likely to have the unintended effect of slowing the growth of production capacity for such fuels by weakening incentives for the private sector to invest in building that capacity," Dinan warned. "Similar effects would occur for other advanced biofuels if the mandates for those fuels were reduced."
'A failure for America'
But Charles T. Drevna, who became a distinguished senior fellow at the Institute for Energy Research after 8 years as president of American Fuel & Petrochemical Manufacturers, called the RFS "a failure for America" because it was based on incorrect oil production and consumption assumptions, as well as unrealistic expectations for Congress and the administration to mandate and create incentives for innovation and vast technological and economic biofuel production leaps.
"Many in Congress and the Bush administration did not consider that the US could and would increase oil production," Drevna said in his testimony.
John DiCicco, a research professor at the University of Michigan's Energy Institute, said that life-cycle modeling for the RFS before it became law used several incorrect assumptions, although he is encouraged by a recent announcement by EPA's inspector general that these analyses would be reexamined. "The program has resulted in higher cumulative carbon dioxide emissions than otherwise would have occurred and has also damaged the environment in many other ways," he said in is testimony. "A correct carbon accounting reveals that the production and use of corn ethanol mandated by the policy has increased carbon dioxide emissions to date."
Advance Biofuels Business Council Executive Director Brooke Coleman testified that the RFS has a successful record in achieving its economic and environmental objectives in the face of a perpetually uncertain and noncompetitive global oil marketplace. "The cellulosic biofuels industry is acutely aware of public criticism about our rate of deployment," he said, adding that next-generation biofuels plants need more certain policies to help attract the necessary investments.