What

Unexpected circumstances are prompting some lawmakers to take a new look at the current Renewable Fuels Standard. Gary Crawford has more:

The purpose of this initial hearing is to perform a check up on the RFS. House Energy and Commerce Committee Chairman Fred Upton opened up a hearing on the Renewable Fuel Standard, which sets yearly mandates for ever increasing amounts of renewable fuels to be produced. Production of those fuels has increased to meet most of the mandates. So that part has gone according to plan. The effects on agriculture have been dramatic. The agriculture department’s chief economist Joe Glaber told lawmakers RFS has spurred big increases in ethanol production from corn:

“That increase has been a factor in the recent corn price boom. This boom has not been shared equally by all segments of the ag industry, livestock and diary producers have faced tighter margins due to feed costs.”

That has spurred some to call for a repeal of the RFS. As to what has not gone as expected, ethanol demand has hit the wall, as its use as a blend into gasoline has declined unexpectedly because gas consumption is going down. There are questions as to if the US can produce enough renewable fuels to meet the ever growing mandates that were set 7 years ago. Experts say they can meet it this year, but the EPA’s Christopher Gruntler said:
“2014 looks much more challenging.”

Long term the RFS program is not projected to come close to achieving the legislative target of 36 billion gallons by 2022. Projects that were supposed to increase, have just not materialized in the time frame that we thought they would.

Supporters of renewable fuels had hoped that when the EPA allowed gas to be blended with ethanol at 15% instead of the current 10%, the demand would increase. But service stations have been reluctant to put in expensive new pumps and tanks.
 


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