New Questions For the RFS

Mark Green
Posted October 16, 2015

It’s been a tough week for corn ethanol producers and supporters of the federal Renewable Fuel Standard (RFS).

First, a new University of Tennessee report finds that the RFS and its ethanol mandates fall short on a number of environmental fronts, and that without mandated ethanol use the corn ethanol industry couldn’t survive commercially. The report:

Looking back over the last 10 years, the RFS and its resulting promotion of corn ethanol as a leading oxygenate supplement to conventional transportation fuels did not meet intended environmental goals. Corn ethanol’s environmental record has failed to meet expectations across a number of metrics that include air pollutants, water contamination, and soil erosion. Corn ethanol has resulted in a number of less favorable environmental outcomes when compared to a scenario in which the traditional transportation fuel market had been left unchanged.

The report says corn ethanol production and use is associated with a number of major pollutants – including volatile organic compounds (VOCs), nitrogen oxides (NOx), particulate matter, sulfur dioxide (SOx) and ammonia – and notes University of Minnesota research showing that corn ethanol increases lifecycle emissions of those pollutants relative to gasoline:

From the inception of the original RFS mandate, ethanol has been lauded as an environmentally-friendly oxygenate. Oxygenates are added to gasoline mainly to reduce carbon monoxide (CO). While ethanol has been shown to reduce CO, Figure 4 shows that other major pollutants actually increase over the ethanol lifecycle.

The referenced Figure 4:

Another chart from the study, showing carbon emissions under three scenarios – business as usual (BAU) or the status quo; one where there’s no RFS/Blenders Tax Credit and ethanol is required to meet actual consumer demand for oxygenates; and one where the lost corn ethanol production in the no RFS/BTC scenario is replaced with cellulosic ethanol production (though the report acknowledges this isn’t possible given current cellulosic output):

Most tellingly, the report finds that as a result of the RFS’ mandates, the rise of corn ethanol has “stymied” growth of advanced biofuels derived from sustainable feedstocks such as corn stover, dedicated energy crops and forest residues – which the RFS was primarily designed to encourage. The study’s chart on corn ethanol’s growing share of total biofuels produced:

The study concludes:

After 10 years of the RFS and its missed objectives, it is time to re-think the design, structure and practical implementation of the RFS and examine whether other policy designs may be more appropriate for promoting the production and consumption of advanced biofuels.

If you’re Big Ethanol, which wants to maintain the RFS status quo, the UT report is a big problem. It adds weight to other analyses (here and here) that say ethanol’s environmental benefits don’t measure up to the claims of its supporters. The predominance of corn ethanol also underscores the reason the advanced biofuels industry favors reforming the RFS.

Coupled with studies that say continued implementation of the RFS could significantly harm the economy and impact consumers, the report adds to the momentum in Congress for repealing or dramatically overhauling a program that has been mismanaged by EPA and whose original objectives have been superseded in a number of ways by surging domestic oil and natural gas production.

Unfortunately for ethanol producers and the RFS, it doesn’t end there. EPA’s inspector general notified the agency this week that it will begin preliminary research on the lifecycle emissions impacts of the RFS. In addition to the updated lifecycle analysis, the review will determine whether EPA complied with statutory reporting requirements of the RFS. The IG investigation highlights the fact that, in addition to not getting the annual RFS rules out on time, EPA also may not have complied with other requirements of the RFS.

With the number of apparent problems with the RFS and Capitol Hill’s keen interest in getting to the bottom of those problems, an IG investigation sounds about right.