NACS Survey: Evolve The Renewable Fuels Standard

June 12, 2013

June 11, 2013– ALEXANDRIA, VA – The requirements of the 2007 Renewable Fuels Standard (RFS) are already outdated and must evolve if the goals of the program are to be achieved, according to NACS.

“The assumptions about the growth of the U.S. motor fuels market that informed the 2007 Congress have proven wrong and the program needs to evolve to reflect current market realities,” said John Eichberger, NACS vice president of government relations. “Six years ago, there was every indication that motor fuels demand would continue to increase. Instead, it has declined by 7% since 2007 and is projected to continue to decline, making it even harder to satisfy the requirements of the RFS.”

The RFS requires that increasing amounts of qualified renewable fuels be integrated into the motor fuels supply, culminating at a minimum of 36 billion gallons in 2022. Based on the U.S. Energy Information Administration’s (EIA) current market projections, this mandate is expected to increase renewables to approximately 28% of the overall gasoline market in 2022, nearly triple the rate of 9.6% in 2012 and almost 40% more than expected when the program was revised in 2007.

While E10 blends (gasoline containing 10% ethanol) are relatively standard across the country, much higher percentages of ethanol — including E15 and E85 — will need to be consumed to satisfy the mandate’s ever-increasing consumption targets. But recent consumer input indicates that the market is not ready to accommodate sufficient volumes of these alternative fuel blends to satisfy the requirements of the RFS. Inadequate infrastructure and limited consumer demand puts the future of the RFS in peril unless adjustments are made.

“For the RFS to succeed, two things have to happen in a relatively short span of time. First, retailers must be able to legally and affordably sell new fuels. Second, consumers need to accept and use the new fuels that will be required by the program. However, gasoline demand destruction combined with the aggressive implementation schedule of the RFS has shortened the timeframe for all of this to happen. Without revisions, the entire program could be in jeopardy,” said Eichberger.