When Congress expanded the Renewable Fuel Standard in 2007, it did so with three important policy objectives in mind.
First and foremost, the program was intended to enhance U.S. energy security by displacing imported petroleum and diversifying the transportation fuels market.
Second, the policy endeavored to strengthen the farm economy by adding value to agricultural commodities.
Finally, by requiring the use of advanced biofuels, the standard was intended to drive innovation and new technologies for the production of even cleaner fuels.
Without question, the Renewable Fuel Standard has lived up to its promise. The increased production of ethanol and other biofuels has helped drive dependence on imported petroleum to an eight-year low. Gasoline imports have plunged from 600,000 barrels per day in 2005 to nearly zero in 2013.
Meanwhile, the standard has catalyzed an economic renaissance in the agriculture sector. Net farm income crested $100 billion for the first time in 2011 and the U.S. Department of Agriculture expects a new record in 2013.
Values for agricultural products, including both meat and grain, are up across the board. Farmers are earning their income from a demand-driven marketplace, and farm program payments are at 15-year lows.
Further, cellulosic ethanol is now being produced at a plant in Florida, and several other commercial-size advanced biofuels facilities are under construction across the United States. The policy has worked.
Unfortunately, it seems some lawmakers and business leaders have lost sight of these benefits and have forgotten the basic objectives of the program. The goals of a more secure and diverse energy supply, a healthier farm economy and a cleaner environment should remain a national priority.
Of course, the oil industry is going to look at the situation from its own business perspective.
Using more renewable fuel means using less petroleum, and that is not something that interests the oil industry. Refiners have already lost 10 percent of the gasoline market to ethanol, and they are leaving no stone unturned in their effort to block cleaner, cheaper biofuels from taking more of their market share.
Big Oil says the so-called E10 “blend wall” caught it by surprise, despite the obvious signal in 2007 that blends above E10 would be necessary. The industry claims it can’t blend volumes of ethanol above the “blend wall” because the infrastructure to dispense E15 and E85, and the vehicles to consume those blends, doesn’t exist.
That’s hogwash. There are more than 15 million E85-capable flex-fuel vehicles on the road today and E85 is sold at nearly 3,200 stations nationwide.
Economists at Iowa State University recently concluded that “E85 can break the blend wall” and facilitate compliance with the Renewable Fuel Standard in 2014 and beyond.
Further, the Environmental Protection Agency has approved the use of E15 in all cars and pickups built since 2001, meaning the fuel can be used in 75 percent of vehicles currently on the road. E15 has been on the market for more than a year now and the number of stations selling E15 is rapidly expanding.
The criticism of biofuel isn’t justified. We should look at Brazil as an example; all of its fuel is a blend – either 25 percent or 85 percent ethanol.
On another front, I don’t want to hear any more argument that we should not use corn for fuel because it pushes up the price of food. The facts don’t justify that argument. Food prices continue to increase a modest 2 percent per year as they have for decades.
This transition to greener renewable fuels can only continue if the EPA and Congress stick to their guns in implementing the Renewable Fuel Standard. I was on the farm last month harvesting corn. It is a bumper crop. We will be buried in corn. The Renewable Fuel Standard has been too successful for consumers and farmers alike to turn back now. The message is simple, “Don’t mess with the RFS.”
John R. Block served as secretary of agriculture under President Ronald Reagan from 1981 to 1986.