Commentary: Are presidential hopefuls ignoring real issues of renewable fuels?

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The debate over policy governing renewable fuel requirements has intensified recently. Powerful interest groups have ignited a divisive battle to influence policy-makers. When it comes to this year’s election, renewable fuels continue to be well-supported, but policy mandating the use of those renewable fuels in gasoline remains to be seen.

The Renewable Fuel Standard (RFS) mandates biofuel volume requirements in fuel. Aside from the clear need to reduce our carbon footprint, the original goal of the RFS was to reduce the United States’ dependence on foreign oil by replacing a portion of imported oil with renewable fuels produced domestically. However, many believe, that has become unnecessary, thanks to the shale revolution.

Jacqueline Campos is a research analyst at Opportune, an international energy consulting firm in Dallas.
Jacqueline Campos is a research analyst at Opportune, an international energy consulting firm in Dallas.

According to the EPA, “We’re balancing two dynamics: Congress’ clear intent to increase renewable fuels over time to address climate change and increase energy security, and the real-world circumstances that have slowed progress toward those goals.”

Taking a deeper look the challenges, it’s clear why this is a hot-button issue for so many.

Compliance

Compliance for the RFS is tracked using Renewable Identification Numbers (RINs).  They act as a currency for the RFS program, bought and sold on an open market. The dilemma is that RINs cannot be utilized until ethanol is blended into fuel, just before delivery to service stations. Once blended, the fuel cannot be transported by pipeline. So, lacking the infrastructure to generate RIN’s independently, many refiners responsible for complying have no choice but to purchase RINs. And skyrocketing RIN prices have caused RFS compliance to become their highest operating expense.

Environment

Another challenge facing the future of the RFS program is the environmental cost. Newer studies show profound effects on water, land use, and greenhouse gas emissions, suggesting that the push for biofuels as a green alternative may be misguided.

According to the National Academy of Sciences in an analysis of the economic and environmental effects of the RFS, “overall production and use of [corn-based] ethanol will result in higher pollutant concentration for ozone and particulate matter than their gasoline counterparts on a national average.”

Production

A setback that further compounds the mandate’s problems is the slow rate of development for advanced and cellulosic biofuels. While the required volume levels for corn ethanol are within reach, achieving the minimum cellulosic biofuel requirement is not possible without significant technological advancement.

Blend wall

Consumption also plays a role in the RFS debate. Gasoline demand is lower than anticipated when the RFS was drafted, resulting in an increasing ratio of ethanol to gasoline in the fuel. This impacts consumers through reduced fuel efficiency, shorter fuel shelf life, and potential engine damage. As mandates exceed the 10 percent ratio, we are forced to face the issue known as the blend wall.

Most vehicles on the road today were not designed to handle anything above a 10 percent ethanol blend (E10). By increasing the amount of ethanol, not only are consumers forced into risking the health of their vehicle, but automakers are also voiding warranties and refusing to take responsibility for issues caused by a higher blend of ethanol.

 

Looking ahead

While many stand resolute and committed to seeing the RFS standards through, due to the abundant concerns, many members of Congress have begun questioning whether it is time to amend or repeal the RFS.  However, this year’s election appears relatively one-sided in regard to Renewable Fuels.

Republican presidential nominee, Donald Trump showed support for the mandate at the Renewable Fuels Summit, an event hosted by one of the RFS mandate’s biggest supporters, Iowa’s Renewable Fuel’s Association. “I will encourage Congress to be cautious in attempting to change any part of the RFS,” said Trump, “[e]nergy independence is a requirement if America is to become great again.”

Democratic presidential nominee, Hillary Clinton has been steadfast in her support of the renewable fuel standards as well. She spoke favorably of funding research into alternative energy technologies. In a May 2015 op-ed piece Iowa’s newspaper, The Gazette, she stressed that the government needs to provide more stability for the renewable fuel industry in the future.

As the 2016 Presidential election gains momentum, however, both candidates show signs of wavering. North Dakota Rep. Kevin Cramer, who has recently begun advising Trump on energy policy, opposed the RFS, recommending a complete repeal the RFS.

Clinton has also alluded to supporting changes to the renewable fuels mandate, stating in her op-ed piece, “We have to get the RFS back on track in a way that provides investors with the certainty they need, protects consumers, improves access to E15, E85, and biodiesel blends, and effectively drives the development of cellulosic and other advanced biofuels.”

Despite apparent wavering, at least one thing remains constant. Regardless of which presidential candidate takes office, numerous challenges of the RFS mandate may remain overlooked in the face of optimism for a greener future.

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