The Renewable Fuel Standard (RFS) requires that the Environmental Protection Agency (EPA) set the Renewable Volume Obligations (RVO) each year. That’s a lot of acronyms, but what it means is that the EPA sets the final rule that tells refiners how many gallons of corn ethanol and other biofuels they have to blend into the fuel supply. The RFS calls for increasing amounts to be blended each year, but the EPA has a lot of leeway in making the final rule.
Friday, the EPA announced that it wouldn’t be making a final rule on the 2014 requirements until sometime in 2015. As if that weren’t frustrating enough for all the stakeholders involved, the 2014 rule was supposed to be finalized back in 2013 so that refiners and ethanol producers alike could anticipate what the next year’s marketplace would look like. In 2015, they will officially be two years behind.
If we needed another reason to believe the RFS mandate was thoroughly broken, this is surely it.
Taxpayers, consumers, and many other groups who oppose the RFS have been urging the EPA to use its authority to waive down the RVO for 2014 and rule that less corn ethanol should be blended into our gasoline. That’s because as a nation we’re now using less gasoline than lawmakers in 2005 originally anticipated thanks largely to the economic downturn, often-high gasoline prices, and increased fuel efficiency. Less demand for gasoline and increasing volumes of ethanol have put refiners ever closer to the “blend wall” – the point at which there’s simply no more room in the supply chain to pump in more ethanol without resorting to higher blends such as E15, which poses a threat to many automobiles, boats, and small engines.
Increasing the corn ethanol mandate would also set in motion a huge range of other unintended consequences such as environmental harm, higher food costs, and increased hunger among the world’s poorest populations.
Many of the same people who regularly suffer the harmful consequences of RFS will have to wait for relief. That’s especially frustrating not only for refiners, but also other industries that rely on corn, such as livestock producers. With no way of knowing what the marketplace will look like, it’s hard to make plans, invest, and hedge against potential high prices.
When corn producers first fought for the RFS, they argued that the nascent corn ethanol industry needed a guaranteed market to get off the ground. Apart from the fact that the corn ethanol industry is thriving and exporting product abroad, it’s ironic that the very regulations they wanted are now creating economic uncertainty across many industries. If there’s one thing that any business needs it’s a predictable regulatory environment– something no one has now.
Taxpayers can’t keep waiting for the EPA to act and hoping it will make the right choice. It’s clear the corn ethanol mandate is broken and we need to urge Congress to repeal or reform this unworkable policy as soon as possible.