Foreign biodiesel producers ♥ RFS, consumers not so much

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October 20, 2017

You would think a policy that was supposed to promote American energy independence would, well, do that.

But that’s not the case with the Renewable Fuel Standard (RFS), a policy that forces increasing amounts of biofuels into the U.S. fuel supply.

To meet the advanced biodiesel requirements set forth by the RFS in 2009, our nation has become more reliant on biofuels imported from other countries. In fact, even while our imports of fossil fuels have fallen significantly thanks to production innovations and changing demand, our biodiesel imports today are the highest they’ve ever been (see graph). So why are biodiesel imports on the rise? The explanation is simple and has two parts: 1. the RFS mandate is growing faster than domestic production, so we’re just not producing enough biodiesel fuel here to satisfy the mandate; and 2. Biodiesel fuel is incredibly expensive – costing about $1.30 more per gallon than petroleum diesel. 

Those two issues, and the fact that biodiesel could be getting even more expensive because of recent international trade tariffs, have prompted the EPA to reevaluate, and possibly lower, the RFS biodiesel mandate.

The whole point of the Energy Independence and Security Act was to reduce America’s dependence on energy imports and help the environment. It wasn’t supposed to provide a big financial boost to other countries, especially not at the expense of American drivers and farm operations that use diesel fuel, or food producers who don’t want vegetable oil being diverted from cooking uses into fuel production.

While the EPA’s choice to review the expensive biodiesel mandate is certainly a step in the right direction, it’s only one part of a broken RFS. And while the RFS may have “matured” the corn ethanol industry, it has not delivered on its other foundational promises. The RFS is not helping our environment and it’s actually worked to increase our reliance on biodiesel imports. RFS reform in Congress is long overdue.