Thursday, April 11, 2013

Rep. Goodlatte's RFS Elimination & Reform Acts

Apr 10: Representative Bob Goodlatte (R-VA) released introduced legislation to alter the Renewable Fuel Standard (RFS). He said, "The RFS debate is no longer just a debate about fuel or food. It is also a debate about jobs, small business, economic growth and freedom. The federal government's creation of an artificial market for the ethanol industry has quite frankly triggered a domino effect that is hurting American consumers, energy producers, livestock producers, food manufacturers, and retailers. Extreme drought last summer and record corn prices made it clear that the RFS is not working. 

    "Diverting feed stocks to fuel has diminished corn supplies for livestock and food producers resulting in higher corn prices.  Higher prices are then passed on to livestock and food producers, meaning consumers across the nation see that increase reflected in the price of food on the grocery store shelves and in restaurants.  At a time when our economy is still struggling to recover, the last thing families and small businesses need are costly government policies that increase their gasoline and grocery bills. Today, I introduced the RFS Elimination Act [H.R.1461], which eliminates the RFS and makes ethanol compete in a free market. This legislation would give relief to livestock and food producers as well as consumers of these products. Renewable fuels play an important role in our all-of-the-above energy policy, but should compete fairly in the marketplace and not be the beneficiary of an anti-competitive government mandate. American families and businesses should not have to shoulder the high cost of this unworkable federal ethanol mandate."

    The Renewable Fuel Standard (RFS) mandates that 36 billion gallons of renewable fuels be part of our nation's fuel supply by 2022. Almost all of this is currently being fulfilled by corn ethanol. In 2011, five billion bushels of the corn supply was used for ethanol -- equal to nearly 40 percent of the U.S. corn crop. Rep. Goodlatte also introduced the bipartisan RFS Reform Act (H.R.1462), which eliminates corn-based ethanol requirements, caps the amount of ethanol that can be blended into conventional gasoline at 10 percent, and requires the EPA to set cellulosic biofuels levels at production levels. He said, "This is a common sense solution to make sure that we have enough corn supplies to meet all of our demands." Both the RFS Elimination Act and the RFS Reform Act will be referred to the House Energy and Commerce Committee.

    According to a release from Rep. Goodlatte, the RFS Reform Act is supported by a diverse group of more than 45 organizations, including ActionAid USA, the American Frozen Food Institute, the Competitive Enterprise Institute, the Environmental Working Group, the Grocery Manufacturers Association, the Milk Producers Council, the National Cattlemen's Beef Association, the National Chicken Council, the National Marine Manufacturers Association, the National Restaurant Association, the National Taxpayers Union, the National Turkey Federation, the Outdoor Power Equipment Institute, and Taxpayers for Common Sense.
    The Renewable Fuels Association (RFA) forcefully responded to the new legislation. Bob Dinneen, RFA's President and CEO, fired back saying, "The motivation behind this bill is backwards, silly, circular logic. The authors insist they're not anti-biofuels, but the bill guts the only program that has successfully opened the market to these new technologies, lowering our dependence on imported oil and reducing the consumer price of gasoline. The authors state they want a 'free market' for energy, but they do nothing to end the billions in subsidies to Big Oil and they deny market access to E15. The authors portend to retain the mandate for new cellulosic and advanced biofuels, but the bill handcuffs the commercialization of these fuels by removing the forward-looking, market-driving provisions of the original legislation. It would be more direct and intellectually honest to simply say 'this bill restores Big Oil's monopoly.' You can't legitimately say 'we support biofuels' and then pull the rug out from underneath companies that relied upon government policy and are now building biorefineries that create hundreds of construction jobs at each location or are hitting milestones in new production. This legislation should have been introduced on Halloween because it will scare away investors. Nothing undermines next generation innovation like uncertainty."
    The American Petroleum Institute (API) President and CEO Jack Gerard said he welcomed the bipartisan proposals. He said, "The nation's ever increasing ethanol mandate is a crisis in waiting, and a chorus of concerned groups has joined API in calling on congress to repeal it. Unless we stop this madness now, the mandate could put consumers in harm's way, hurt the economy, and disrupt the nation's fuel supply. Ethanol and other renewable fuels have an important role to play in our transportation fuel mix and will continue to be used after Congress repeals the mandate. But we cannot allow a mandate for ethanol that exceeds what is safe and that could put upward pressure on fuel prices."
    Gerard said that the industry is hitting the ethanol blend wall, meaning the amount of ethanol required to be blended under the RFS is unsafe for most vehicles on the road today. He said millions of cars could be severely damaged by fuel blends that contain more than 10 percent ethanol, and cited studies by the Coordinating Research Council. He also cited statements by the automakers which have said higher ethanol blends would void car warranties. He indicated that by 2015, the mandate would cause severe fuel rationing that would lead to a $770 billion decrease in U.S. GDP and a $580 billion decrease in take-home pay for American workers according to a study by NERA economic consulting. 
    Environmental Working Group (EWG) Vice President for Government Affairs Scott Faber issued a statement indicating that the RFS Reform Act, which is also sponsored by Jim Costa (D-CA), Peter Welch (D-VT) and Steve Womack (R-AR), ". . .makes much-needed room in the fuel pool for advanced alternatives that actually lower greenhouse gas emissions and do not compete with our food needs. In doing so, it helps ensure a cleaner energy future that benefits both consumers and the environment."
    Access a release from Rep. Goodlatte (click here). Access legislative details for H.R.1461 (click here); and H.R.1462 (click here). Access a release from RFA (click here). Access a release from API with links to the cited information (click here). Access the statement from EWG (click here). [#Energy/RFS, #Energy/Ethanol, #Energy/Biofuels]
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