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We need a comprehensive approach to the renewable fuel standard


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More than a decade has passed since the renewable fuel standard was greatly expanded in the 2007 energy bill. The federal mandate requires 36 billion gallons of biofuels (mainly corn ethanol) to be blended with US gasoline and diesel by 2022. While recent news has been dominated by policy implications for small petroleum refiners, the fuel standard has a history of harm to a wide range of stakeholders, including federal taxpayers. Joining a long list of strange bedfellows including small engine manufacturers, consumer advocates, the food industry, anti-hunger groups, environmentalists and livestock groups, taxpayers for Common Sense believe the biofuels mandate has worked well for most. have done more damage – except perhaps with one notable exception, maize producers.

Unfortunately, recent debate in Washington has ignored most of these interested parties, focusing instead on the battle between the oil and corn industries over the future of the standard. The oil industry, representing “obliged parties”, or required to comply with the standard, indicates a high cost for renewable identification number (each gallon of biofuel produced is assigned a unique number, which is then can be bought, sold or traded) as the reason for the recent bankruptcy of Philadelphia Energy Solutions. As an independent merchant refiner, Philadelphia Energy Solutions purchases renewable identification numbers to meet fuel standard requirements rather than mixing ethanol with gasoline.

Sen. Ted Cruz, a Republican opponent of both ethanol subsidies and renewable fuel standards from the oil-rich state of Texas, withheld ratification of the US Department of Agriculture undersecretary for months until he secured a White House meeting on the issue. Of. Last week, Cruz and three other senators from the oil and corn states met with White House officials and attempted to strike a deal on some administrative reforms. Another meeting took place with the oil and biofuels industries, including representatives from two ethanol and biodiesel facilities that have received at least $24 million in taxpayer subsidies from 2009-16 through the Department of Agriculture’s Bioenergy Program for Advanced Biofuels. have been received. Attendees reportedly discussed capping identification number prices in exchange for E15, or 15 percent ethanol (most gasoline is currently E10 – blended with 10 percent ethanol). Ozone concerns have restricted the sale of E15 in the summer – it’s more polluting that E10 – not to mention the liability issues with E15 and the ban on its use in older vehicles and smaller engines.

The corn and ethanol industries have so far been reluctant to accept the low renewable identification number cost for year-round E15 sales. The University of Illinois projects that the oil industry would benefit more from corn if these administrative changes were implemented in tandem. Iowa GOP Sen. Chuck Grassley indicated after last week’s meeting that participants agreed to study the economic impact analysis of these proposals going forward.

The problem with this approach is that it only considers a sample of the negative impacts of the renewable fuel standard. The oil and corn industries may be the most politically powerful interests regarding this policy, but policymakers need to assess the full history of the standard, with high costs on the poor, taxpayers, small engine owners and consumers alike. to give a description of In 2008, former Texas Governor Rick Perry (now Secretary of Energy) requested that the Environmental Protection Agency waive the renewable fuel standard requirements due to high food prices (since most biofuels are produced from food-based feedstocks such as corn and soybeans). are there). In 2012, Perry and 10 other governors requested an exemption from the corn ethanol mandate given the historic US drought and its impact on record corn prices. And earlier this year, Democratic Gov. Carney of Delaware requested a renewable fuel standard waiver because of higher costs for refiners in his and other states.

Over the years, my organization has worked closely with a wide range of stakeholders, from oil refiners to grocers, conservationists, anti-poverty policy winners and others, to find solutions that work for all. To fully assess policy failures over the past decade and the most promising opportunities for improvement, policymakers need to take a similar approach and involve a wide range of stakeholders. Only then will a comprehensive solution be found.



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