Flawed RFS offers lesson for makers of energy policy

Dec. 8, 2017
Would-be reformers of energy consumption should heed a message in new discussions about the US Renewable Fuel Standard.

Would-be reformers of energy consumption should heed a message in new discussions about the US Renewable Fuel Standard.

So far, that triumph of centralization has escaped President Donald Trump’s blitz against the regulatory excesses he inherited.

The Environmental Protection Agency in late November published a final rule on the 2018 RFS little changed from 2017 requirements.

Among other problems, refiners and importers of gasoline still must sell more grain ethanol than the market needs at the 10% blending level and buy credits to the extent they cannot.

The ethanol lobby argues that raising the blending level would solve the problem.

But that prospect meets resistance from manufacturers of vehicles and equipment with engines not designed to accommodate elevated concentrations of ethanol, as well as refiners sure of who receives blame for engines damaged by fuel.

For debate on how to resolve these issues, Trump usefully defined boundaries of the possible in a meeting with eight senators concerned about the RFS on Dec. 7.

According to attendees, Trump expressed willingness to adjust the RFS in ways that that protect jobs in refining and agriculture.

His stance precludes many refiners’ best hope: outright repeal of the RFS.

But it’s politically practical. Farm-state politicians cherish the program for the boost it gives demand for corn and construction of ethanol plants.

Compromise should be possible.

An industry inflated by the RFS is in place, along with its workers. Yet reasons for the underlying program no longer apply.

Supply extension fades as a policy priority with US oil production surging. And the environmental benefits ethanol and other biofuels prove to have been exaggerated.

Refiners and ethanol advocates should be able to agree that the problem isn’t the existence of a biofuels industry. The problem is a system of ill-informed mandates, inevitably shaped more by politics than by market realities.

Compromise should start there.

The message for policy-makers is that mistakes grounded in political energy selection are hard to correct. They need to stop making them.

(From the subscription area of www.ogj.com, posted Dec. 8, 2017; author’s e-mail: [email protected])