Defending the Merits of the RFS

By Brian Jennings | October 18, 2011

Life is full of uncertainties. 

While there’s been some hand-wringing about the size of this year’s corn crop, as harvest comes to an end and the bushels pile up we’re reminded that American farmers are the most productive and efficient in the world. We won’t know for certain the final corn tally until the USDA collects and files its reports but it’s safe to say the doomsday crowd is wrong once again.

As of this writing, we also don’t know whether reforming the Volumetric Ethanol Excise Tax Credit to support blender pumps, small ethanol producers and cellulosic ethanol will be enacted by Congress. Inside the beltway, conventional wisdom would predict reform at this late stage is doubtful and therefore the tax incentives, including the tariff, will simply expire at year’s end.

What we do know is that ethanol opponents won’t be satisfied to witness VEETC’s demise; their sights are fixed on the renewable fuel standard (RFS) as well. Indeed, for months groups such as meat packers and grocery manufacturers have been scheming ways to dismantle it. Already five bills have been introduced in Congress to modify, reduce or repeal the RFS. While this legislation poses more headline-type public relations risk to our industry than a real threat, the drumbeat to repeal the RFS will only continue and we should expect serious legislative attempts in 2012.

As in previous policy battles, the ethanol industry has the facts on its side. The American Coalition for Ethanol will be very aggressive in defending the merits of the RFS using those facts. For instance, according to a May 2011 report from the U.S. Energy Information Administration, “U.S. dependence on imported oil has dramatically declined since peaking in 2005.” EIA goes on to say, “by the broadest measure, U.S. dependence on imported oil fell from 60.3 percent in 2005 to 49.3 percent in 2010.” EIA’s report further notes that “increases in biofuels production also played an important role in moderating import dependence. U.S. ethanol net inputs grew from 230,000 barrels per day in 2005 to 779,000 bbl/day in 2010.”

This much is certain, the RFS is the single most effective policy enacted by Congress to increase supplies of domestic, affordable and clean biofuel and reduce foreign oil imports. We must fight and fight like hell to defeat any attempt to reduce or repeal it. Not only would reduction or repeal of the RFS signal a retreat, turning the clock back to pre-2005 days when foreign oil comprised more than 60 percent of U.S. demand, but fuel prices would increase on American working families and small businesses as well.

We all know who stands to benefit from repeal of the RFS. Meatpackers and grocery manufacturers who feel they are entitled to cheap corn forever, because it would once again require taxpayers to subsidize the production of cheap corn merely to their benefit. And let’s not forget OPEC, the seemingly untouchable oil baron of the world, just salivating at the thought of repealing the RFS. They hate the fact that in the U.S., we can grow our own fuel from our own farms.

This much is also certain, the law already provides EPA mechanisms to adjust the RFS if a legitimate case can be made by a petitioner. If grocery manufacturers, meat packers, and integrated livestock conglomerates have compelling evidence of inadequate corn supplies or extreme high prices they should prove it by making a credible case to EPA.

Oil company actions prior to the RFS proved that, left to their own devices, they wouldn’t use a cleaner, safer, more affordable, domestic alternative in ethanol. The real-world benefits stemming from enactment of the RFS are unmistakable and we must stand up and fight to protect it.

Of that we must be certain.

Author: Brian Jennings,
Executive Vice President,
American Coalition for Ethanol
(605) 334-3381