January 29

January 29, 2020: The RFS Is a Mandate for Foreign Biofuels

New data confirm what we already know: the Renewable Fuel Standard (RFS) is really a foreign biofuels mandate.

The U.S. Energy Information Administration (EIA) just released its latest Short-Term Energy Outlook and the data confirm that overly aggressive biofuel mandates in the US can only be met with increased foreign imports.

Let’s look at the numbers. The EIA found that “net imports of biomass-based diesel increased by 47% to an average 23,000 b/d in 2019, and EIA expects them to increase further to an average 28,000 b/d in 2020 and to 39,000 b/d in 2021.”

Why are imports increasing? According to EIA, “Increased net imports of biomass-based diesel are driven primarily by increased volumes of renewable diesel imported to meet…rising RFS targets.”

EPA’s aggressive conventional biofuel requirement (e.g. ethanol) exceeds the “blendwall” – the amount of ethanol that can physically be blended into the gasoline supply given car engine and gas pump infrastructure compatibility limitations.  This forces domestic refiners to over-comply with the biomass-based diesel and advanced biofuel mandates to meet their overall RFS requirements. However, not enough domestic biodiesel, renewable diesel or other “advanced biofuels” are produced in the U.S. to meet the mandate for those specific fuels, let alone make extra fuel to bridge the gap between ethanol that can physically be consumed due to the “blendwall” limits and the overly aggressive conventional (e.g. ethanol) portion of the RFS mandate.  As a result, refiners must rely on imports of foreign biofuel to fill the gap. 

For more evidence, look no further than EPA’s own data that show refiners had to rely on 481 million gallons of foreign fuel to meet the RFS in 2019.

The bottom line is simple. US domestic refiners have to shell out money to foreign companies to pay for RFS compliance.

At the end of the day, the data are crystal clear: the only effect that increasing blending mandates has is to raise the amount of foreign fuel that refiners import to meet excessively aggressive biofuel volume mandates.

That doesn’t help farmers or advance U.S. energy security.