The Wall Street Journal: Bad Ethanol Policy Is a Job Killer

September 3, 2013

Rep. Patrick Meehan and Pat Eiding, September 2 – Like most ideas in Congress, the Renewable Fuel Standard was rooted in good intention. Enacted in 2005 by President George W. Bush and with strong bipartisan support, the RFS was designed to improve energy security and the environment by requiring that the transportation fuels Americans use include a minimum amount of renewable fuels. Administered by the Environmental Protection Agency, the RFS sets a schedule for increasing the amount of renewable fuel used each year, regardless of demand.

The good news is that each gallon of gasoline now includes a 10% ethanol blend. The bad news is that despite technological limits and a lack of consumer demand for greater concentrations of ethanol, the EPA is now mandating that refiners use more than a 10% ethanol blend. That's something refiners simply cannot do.

The Renewable Fuel Standard created a market-based compliance system in which refiners must submit credits to prove that the required amount of renewable fuel is used or paid for by them each year. These credits, known as Renewable Identification Numbers, can be bought or sold like commodities. Both refiners and blenders acquire RINs by either blending the renewable fuel or buying credits in lieu of blending.