The Environmental Protection Agency (EPA) released its annual renewable fuel volume requirements, which set the amount of fuel derived from renewable resources that must be mixed into the nation’s supply of gasoline and diesel. The volumes act as the implementation mechanism for the Renewable Fuel Standard (RFS), a misguided congressionally-mandated policy enacted in the 2005 Energy Policy Act to spur renewable fuel production. In practice, the RFS has been propping up the mature corn ethanol industry since 2007, costing taxpayers billions of dollars in fuel and food price increases. The bill also established several supports for advanced biofuels, including the renewable diesel and biofuels infrastructure tax credits, but more importantly, it was the first time the U.S. mandated consumption of renewable fuels.
Domestic biofuels policy is primarily supported by three major pieces of legislation: the Energy Policy Act of 2005, the Energy Independence and Security Act of 2007, and the farm bill. Annual tax credits are also renewed in various tax extender packages, often tied to other legislation. The first RFS required 7.5 billion gallons of renewable fuels to be blended with gasoline or diesel by 2012. In the 2007 energy bill, requirements were increased to 36 billion gallons of biofuels to be consumed by 2022.
The increased requirements, referred to as the RFS2, set new target volumes for certain types of biofuels under the total amount to be blended into fuel each year. However, given lower than anticipated actual production of cellulosic and advanced biofuels, those requirements have been adjusted downward via EPA’s annual volume determinations (see Table 1 below). Despite the reduction in mandated fuel levels since 2014, advanced biofuels have remained unable to fulfil adjusted volumes, allowing corn ethanol to enjoy the lion’s share of the mandate.
The 2018 volume requirements raise the cellulosic biofuel mandate by only 50 million gallons to 361 million gallons. For comparison, the 2007 energy bill originally set the cellulosic biofuel target at 7 billion gallons for 2018. The 361 million gallons also make up less than two percent of the total RFS mandated volume of 19.29 billion gallons of bio-based fuels for calendar year 2018, the vast majority of which will be comprised of corn based fuels.
Table 1: Total Gallons of Renewable Fuel that Must be Blended with U.S. Motor Fuel in the Renewable Fuel Standard
Billions of Gallons/Year Mandated by the RFS2
Actual Volume in Billions of Gallons/Year, as Adjusted by EPA