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CBO says Renewable Fuel Standard no longer viable




Indiana Correspondent


WASHINGTON, D.C. — Fully complying with the Renewable Fuel Standard (RFS) as it was originally written is not feasible, according to a report issued by the Congressional Budget Office (CBO) last week.

The non-partisan CBO stated its conclusion is based on "two main obstacles:" the lack of supply of cellulosic biofuel, made from the cellulose of plants, and the inability of older vehicles to tolerate higher levels of ethanol.

In its evaluation, the CBO considered three scenarios for 2017: the volumes of renewable fuel established by the Energy Independence and Security Act of 2007 (EISA), on which the RFS is based; the 2014 volumes scenario, based on the U.S. EPA’s proposed levels for this year, which significantly lower mandates for ethanol, biodiesel and other biofuel; and the repeal scenario, in which lawmakers immediately abolish RFS.

"The repeal scenario would require Congressional action. In the absence of such action ... CBO considers the 2014 volumes scenario much more likely than the EISA volumes scenario," read the report.

CBO further said the EISA-mandated volumes would require "a large and rapid increase in the use of advanced biofuels" and would cause the use of ethanol to outpace the infrastructure of fueling stations.

Although ethanol made from cornstarch makes up most of the biofuel supply, the RFS requires an increasing percentage to come from advanced biofuel, such as soybean oil or animal fat, sugarcane and cellulose plant materials.

The COB report indicated cellulosic biofuel will continue to fall short of EISA targets, as they have every year since passage of the RFS. Ken Parrent, director of Biofuels for the Indiana Corn Marketing Council, said the cellulosic industry is just starting to take off. He said three new plants are scheduled to open this year.

The report also described the difficulty of adding increasing amounts of ethanol to the U.S. fuel supply as required by the RFS. It claims an increasing percentage of ethanol in the fuel supply could damage older vehicles. Currently, most gasoline contains up to 10 percent ethanol. It also notes fewer than 2 percent of filling stations sell high-ethanol blends, such as E85.

Ethanol and food prices


Critics of ethanol have complained its manufacture is causing higher food prices, but the report did not support that idea, instead claiming food prices would be about the same whether the RFS exists. While supporters of ethanol are probably happy with that conclusion, the rest of the report – detailing the rise in gas prices and the lack of impact on greenhouse gas (GHG) – seemed to fuel critics of ethanol.

The CBO estimated the cost of gas would go up in 2017 if RFS targets are unchanged. To meet the standard, fuel suppliers would have to use three times as many gallons of advanced biofuel and much more ethanol, causing the price of petroleum-based diesel to rise by 30 cents per gallon.

Also, the price of E10, the most common transportation fuel, would increase by 13 cents per gallon, while E85 would decrease by 91 cents per gallon. But the report also issued a disclaimer that those estimates are "highly uncertain" because of little information on supply and demand for renewable fuels in response to price changes.

An environmentalist website,, used the CBO report to state gas prices would go up because of the RFS and added that arguments linking "Big Ethanol" to less pollution were "totally bogus."

The CBO stated "researchers’ predictions vary considerably" on the question of the impact of renewable fuel on greenhouse gas emissions. Its report said available evidence suggests corn ethanol will have only limited potential for reducing emissions, while some studies indicate increased emissions.

However, the CBO contended a better substitute is advanced biofuel, especially cellulosic biofuel, because of its potential to reduce emissions.

The Advanced Ethanol Council (AEC) questioned the impartiality and objectivity of the CBO report.

"Some reports are not worth reading, and this is one of them. You cannot assess the impact of the RFS without looking at the benefits of reducing consumer demand for gasoline and diesel fuel. That’s the entire point of the RFS, and the CBO simply states that ‘it did not account for that effect in this analysis,’" said Brooke Coleman, executive director of the AEC.

Various studies and reports illustrate the spectrum of opinions on ethanol. According to a report by Environmental Working Group, entitled Ethanol’s Broken Promise, EPA’s recent proposal to cut the amount of corn ethanol that must be blended into gasoline in 2014 by 1.39 billion gallons would equate to removing 3 million tons of carbon dioxide from the air – lowering greenhouse gas emissions.

Parrent charged, however, the EWG is not a reputable source because it skews data and is outspoken in its criticism of agriculture. The University of Nebraska also recently published a study that indicated cellulosic biofuel increases carbon dioxide emissions, a study that was widely dispersed by news outlets.

Many other studies and outlets dispute that conclusion. Midwest Energy News reported on its nonprofit news site that the Nebraska study assumed bad agronomic practices; a study by USDA and Iowa State University found cellulosic ethanol reduces GHG emissions while maintaining soil health.

Studies by other universities, the U.S. Department of Energy, Argonne National Laboratory (sustainable energy advocate), National Renewable Energy Lab and Oak Ridge National Laboratory "find cellulosic ethanol, in particular, and ethanol, in general, to provide net GHG emissions reductions when compared to petroleum based fuels," Parrent said.