The flaws of the RFS, as explained by the EPA, USDA and EIA

June 28, 2013

It’s clear the Renewable Fuel Standard (RFS) is a boondoggle of a policy when three separate government agency representatives — with a stake in the policy’s implementation — testify to its various harmful defects.
On Wednesday, the U.S. House of Representative’s Committee on Energy and Commerce held a hearing on the RFS in its Energy and Power Subcommittee to gain clarity — from government officials — on how the RFS is impacting the environment, our nation’s fuel supply and consumers. 

First to testify was Adam Sieminksi, administrator of the U.S. Energy Information Administration (EIA). Siemenski argued that “ethanol faces some major demand and distribution system challenges that make it difficult to increase its use as a motor fuel regardless of its source.”  Essentially, since higher blends of ethanol in gasoline (such as E15) stand to damage much of the nation’s retail infrastructure, transport fleet and motorized equipment, achieving RFS mandates is nearly impossible. According to Siemenski, “The implicit premise that cellulosic and other advanced biofuels would be available in significant quantities at reasonable costs within 5 to 10 years following adoption of the 2007 RFS targets has not been borne out.” So far, not so good.

To follow, Joseph Glauber, chief economist for the U.S. Department of Agriculture (USDA), provided equally alarming testimony regarding the effects of ethanol production on agricultural prices. According to Glauber, rising corn and commodity prices are directly linked to increased ethanol production: “the increase in U.S. ethanol production was estimated to account for about 36 percent of the increase in corn prices over the period from 2006 to 2009.”

As corn is vital to animal feed, and its prices also influence the prices of wheat, soybeans and other commodities, it’s no surprise that since the RFS was expanded in 2007, prices for cereal and bakery products in the United States have risen 77 percent; prices for meat, poultry, fish and eggs have increased 78 percent; and prices for vegetable oil and fats are up 444 percent. 

Perhaps most damning was the testimony of Christopher Grundler, a representative from the very organization that has the authority to set or adjust RFS mandates within the RFS — the Environmental Protection Agency. He acknowledged the difficulty in achieving the mandates by plainly stating, “to the extent that ethanol is likely to be used to meet RFS volume requirements, the volume of ethanol that can be legally and practically consumed is a limiting factor in meeting the statutory volumes.”

If it wasn’t made clear by many of our nation’s farmers, consumer advocates and various industry leaders that the RFS is simply bad policy, the RFS’ own watchdogs have now provided sworn testimony to its defects. Is it time for a change yet?