Congress Should Not Fix What Isn’t Broken

By Brent Erickson, Executive VP, BIO; Head, Industrial & Environmental Section

The underlying legal constructs of the Renewable Fuels Standard (RFS) remain in working order, despite the Environmental Protection Agency’s (EPA) failure to issue a final 2014 rule and its other regulatory missteps. Over the past five years, the program spurred billions of dollars of investment in the biofuels space, measurably reducing U.S. reliance on foreign oil along with greenhouse gas emissions.

EPA mishandled the 2014 rule over the past year after it got sidetracked by a spurious argument over how much of the transportation fuel market should be protected for the oil refining industry. Congress is right to conduct oversight on EPA’s administration of the program with an eye to ending the onerous administrative delays. But lawmakers should not try to fix or “reform” a program that is not really broken.

Tangible results of the RFS in action

If Congress needs proof that the RFS continues to work there are now tangible results. This year, first-of-a-kind commercial-scale cellulosic biofuel facilities began operations. POET-DSM’s 25-million-gallon-per-year Project Liberty in Emmetsburg, Iowa, opened in early September and is ramping up to full production. Abengoa opened its 25-million-gallon-per-year cellulosic ethanol biorefinery in Hugoton, Kansas, in October. And INEOS Bio began operating its 8-million-gallon-per-year facility in Vero Beach, Florida, at the beginning of the year.

Commercializing new technology is never easy or fast. The technology for all three facilities was in development for nearly a decade and will continue to be perfected in these first-of-kind facilities. But that is a very fast pace for commercializing a new technology. The RFS clearly accelerated the development of these and many additional technologies for advanced biofuels and renewable chemicals, all of which contribute to America’s energy security and a cleaner environment. And that is precisely what the RFS was designed to do.

Consistency is what is needed

Consistent implementation of the RFS is what we’ve needed all along. Companies have invested more than $6 billion in R&D and commercialization efforts to get the advanced biofuel industry off the ground in the United States. We shouldn’t contemplate walking away from that now. We’ve already seen the damage that can be done. Just as these companies were bringing their projects to fruition, EPA proposed its change to the RFS methodology and put a severe chill on the industry’s visible progress. The agency created uncertainty for advanced biofuel producers, which undercut investment in the sector. And continued uncertainty about the future of the program will only further starve the advanced biofuel industry of necessary investment. To move forward, advanced biofuel producers need stable policy that ensures access to the market over time; that is the prerequisite for continued investment in advanced biofuels.

Further, the agency’s delays in administering other aspects of the program blocked more companies from reaching the market. The delays in approving new pathways for producing cellulosic biofuels, with new technologies and new energy crops, are approaching two years. Currently, more than 30 new biofuel pathways are awaiting agency review and approval or the start of lengthy rulemakings. EPA approved two pathways in July this year, enabling more than 17 million gallons of cellulosic biofuel to be brought to market within a few months’ time. The ongoing delay for other pathways is an obstacle to progress and to meeting the program’s goals. EPA must administer the program more efficiently.

Let’s face it: politics and business are full contact sports. The oil companies have been “rushing the passer” for two years now. A drawn out Congressional reform process would only serve to lengthen the delay in administrating the program, prolong the atmosphere of uncertainty for investors and continue to inhibit further development of advanced biofuels. The oil industry is advocating reform and repeal of the RFS precisely for this purpose. Congress should not act like the 12th man on the field for the oil refining industry.

Let RFS be the game changer it was designed to be

But no one should be fooled; the claim that the RFS needs reform is a canard. The oil refining industry protests that fuel efficiency standards and falling gasoline use in the United States should limit the amount of biofuel the United States uses. But as the oil industry was pressing this argument, gasoline use actually jumped by about 2 billion gallons in both 2013 and 2014. Current low oil prices will probably continue to drive higher gasoline use in 2015. In addition, Congress never intended to codify the so called “blend wall” and require only 10 percent biofuels in our gasoline. Simply put, the RFS was not designed to preserve market share for the oil refining industry; it was meant to be a game changer and to incentivize more biofuel blending. We should let it work.

The biofuels industry does not need negative legislative RFS “reform,” but Congress is right to continue urging EPA to get back on track with appropriate administration of the RFS. EPA’s ongoing delays in administering the RFS undermine the emerging advanced biofuel industry. A number of key Congressional leaders put pressure on EPA throughout the year, including a bipartisan group of 31 Senators who urged EPA to fix the methodology in public comments last January. With EPA’s withdrawal of the rule, the 2014 game has gone into overtime. The advanced biofuel industry needs the RFS to continue to work; it does not need further delays through attempts to fix what isn’t broken.