US Must Maintain Its Leadership on Biofuels

The Global Scene columnist from the Global Renewable Fuels Alliance says the importance of the RFS cannot be overstated. This column appears in the February print edition of Ethanol Producer Magazine.
By Bliss Baker | January 20, 2017

What an interesting year we had in 2016: historically low oil prices, unprecedented international cooperation on climate action and a drawn-out U.S. presidential election. The lifting of sanctions against Iran and increased production from Russia, combined with a refusal from OPEC member countries to limit production, drove crude prices to recent lows. This situation continued until the end of the year when OPEC member countries, joined by limited cooperation from Russia, finally reached an agreement to limit output in an attempt to encourage some price recovery.

It remains to be seen how long these agreements will last and what their impact will be, but one thing is clear, the persistently low oil prices seen in recent years has not stopped international momentum toward taking meaningful steps to reduce emissions.

In spite of less-than-ideal circumstances, 2016 saw increased international recognition of the significant opportunities presented by biofuels to support the transition to a low-carbon global economy. Multiple nongovernmental organizations published reports outlining the potential to significantly increase biofuels use on a cost-efficient basis to 2030 and public and private organizations have started to form international coalitions focused on developing specific policy solutions.

The most significant development on this front was, of course, the speedy passage and ratification of the first binding international agreement to limit global emissions at COP21 in Paris. The Paris agreement’s entry into force last year formalized emission reduction plans for 197 countries, and provided a framework for individual national targets. Of these, more than 80 either already have biofuels-supportive policies in place, or have signaled the intent to introduce them.

These pledged commitments from some of the world’s largest economies have provided the Paris agreement with a legitimacy that distinguishes it from all previous attempts to reign in global emissions.

Time will tell what specific policy action countries will take in response to these unprecedented political commitments, but for now, all eyes are on the U.S. and the new administration to see what changes in policy direction are planned. 

With the passing of the renewable fuels standard (RFS) in 2005, the U.S. established itself as the clear global leader in biofuels production and research and development, with its policy framework being repeatedly emulated in countries around the world.

The importance of the RFS in supporting the establishment of a strong domestic biofuels industry cannot be overstated and is directly responsible for the subsequent success of the industry in contributing to the diversification of the domestic energy supply mix, supporting energy independence and strengthening rural economies.

Despite this success, concern about the potential for significant policy shifts has resulted in international leaders adopting a “wait and see” approach. At the COP22 convention held in Marrakech, Morocco, at the end of 2016, negotiations were decidedly less activist than just months earlier due to the uncertainty surrounding the outcome of the U.S. presidential election and the potential for U.S. withdrawal from the Paris agreement.

This hesitation was understandable given some of the campaign statements about wanting to “cancel” or “renegotiate” the Paris agreement and expressing skepticism about human activity causing climate change.

After the election, though, the president-elect offered more conciliatory language on these issues. He acknowledged “some connectivity” between human actions and climate change and has said he has an “open mind” about the Paris agreement. Far less ambiguous has been the emphasis on the need to reduce dependence on foreign oil and a commitment to keeping jobs in the U.S.

President Trump is on the record describing the RFS as “an important tool in the mission to achieve energy independence for the U.S.” He has urged the U.S. EPA to “ensure that biofuel ... blend levels match the statutory level set by Congress under the RFS.” The economic impact of the standard is significant. The economic activity supported by ethanol production in the U.S. amounted to more than 350,000 direct, indirect and induced jobs in 2015.

It remains to be seen whether the new president will pursue U.S. withdrawal from the Paris agreement and roll back policies designed to reduce GHG emissions, but what isn’t in question is the overall positive impact of domestic ethanol production.

Author: Bliss Baker,
President, Global Renewable Fuels Alliance
[email protected]