Renewable Fuel Standard Fill up on Facts
Total Page：16
File Type：pdf, Size：1020Kb
Renewable Fuel Standard Fill Up On Facts America’s Oil and Natural Gas Industry November 2017 For the latest report, please visit www.api.org/policy-and-issues/fuels and www.filluponfacts.com Table of Contents Fill Up On Facts The RFS Needs Reform ...................................................................................Page 1 The Cost of Mandates ......................................................................................Page 2 The Reality of America’s Energy Revolution ......................................................Page 3 Outdated Supply and Demand Projections ......................................................Page 4 Disconnect Between EPA Mandate and Technology ........................................Page 5 What is “The Blend Wall?” ................................................................................Page 6 E15 and Your Car .............................................................................................Page 7, 8 Fairytale Thinking on E85 and Ethanol Mandates .............................................Page 9, 10 The RFS is Bad Policy: National and Multi-Industry Consensus .......................Page 11 A Bumpy Ride for Motorcyclists .......................................................................Page 12 Rising Ethanol Blends Don’t Float All Boats ......................................................Page 13, 14 Outdoor Power Equipment and the RFS ..........................................................Page 15, 16 Glossary ...........................................................................................................Page 17 Resources ........................................................................................................Page 18 The Renewable Fuel Standard: Fill Up On Facts | November 2017 The RFS Needs Reform Video: API’s Frank Macchiarola Video: API’s Jack Gerard Testimony on EPA’s proposal to reduce EPA should focus on potential the RFS volumes economic harm to consumers At the very top of EPA’s Renewable Fuel Standard As for emissions, levels of carbon dioxide associated website, you’ll find this description of the program with electricity generation are near 30-year lows, devised by Congress in 2005 and expanded in 2007: primarily because of increased use of cleaner-burning natural gas. Congress created the renewable fuel standard (RFS) program to reduce greenhouse gas emissions and “Congress can put in place common-sense, bipartisan expand the nation’s renewable fuels sector while reforms that advance sustainable fuels the right way – reducing reliance on imported oil. solutions that work for family farmers while protecting our water, wildlife, and economy.” Collin O’Mara, No question, the RFS was well-intentioned. But more president and CEO of the National Wildlife Federation than a decade later, here’s what we know about those top-line objectives set out by Congress: While the United States has made important climate progress and increased its energy security largely apart • First, while the United States is less reliant on from RFS contributions, the RFS itself continues to have imported crude oil – it’s mostly because of surging difficulties that could impact consumers and the overall domestic crude production, not creation of the RFS. economy. Frank Macchiarola, API downstream group director (pictured above), described some of these in • Greenhouse gas emissions have declined – primarily remarks at EPA’s public hearing in Washington. because increased use of cleaner-burning natural gas, not RFS mandates requiring ever-increasing EPA’s latest ethanol volume proposal – reducing volumes levels of ethanol in the nation’s gasoline supply. from unattainable levels set out by Congress a decade ago – is the right move, but more is needed. With EPA receiving public input on its proposed ethanol-use volumes for 2018, it’s important to see that America’s energy renaissance in natural gas and oil production is the biggest reason for the progress the U.S. has made toward those RFS objectives. The Renewable Fuel Standard: Page 1 Fill Up On Facts | November 2017 The Cost of Mandates Since the inception of the ethanol mandate a decade consumers money and choice, and threaten far higher ago, the United States has undergone an energy costs in the form of engine damage. transformation from a nation of energy dependence and scarcity to one of energy security and abundance. Furthermore, as stated by the EPA “Biofuels also tend America has significantly increased domestic crude to require subsidies and other market interventions to oil production and transitioned from a net importer of compete economically with fossil fuels, which creates refined petroleum products to a net exporter. It is well deadweight losses in the economy.”1 past time to reform outdated energy policies to reflect the energy realities of today and tomorrow. Simply stated, the RFS mandate creates potential harm to the American consumer. And it must be fixed. Surveys Today, most gasoline contains 10 percent ethanol by show that the American people agree, with nearly three- volume. However, if the Renewable Fuel Standard quarters of voters concerned about the potential harms (RFS) requirements continue to be implemented, created by the increasing prevalence of ethanol blends our nation could exceed this level of ethanol in the to over 10 percent of the fuel mix. The RFS has proven fuel mix. Extensive testing by the automotive and oil to be an unworkable program. industries shows higher ethanol blends may result in damaged engines and fuel systems for owners of Congress must repeal or significantly reform the the overwhelming majority of cars. Automakers have Renewable Fuel Standard to protect American warned these increased blends of ethanol could void consumers. car warranties. Increased RFS volumes could also cost 1. EPA, Economics of Biofuels, September 26, 2017, https://www.epa.gov/environmental-economics/economics-biofuels The Renewable Fuel Standard: Page 2 Fill Up On Facts | November 2017 The Reality of America’s Energy Revolution Increased U.S. Crude Oil Production: Primary Factor in Declining Crude Import (change in fuel source: 2008 to 2017) 4500 415,000 barrels per day 4000 3500 3000 2500 2000 4061,000 barrels per day 1500 1000 500 0 -500 thousand barrels per day thousand barrels -1000 -1500 -2000 -2518,000 barrels per day -2500 -3000 Domestic Ethanol Production Domestic Crude Production Net Imports Source: EIA Monthly Energy Review. Accessed April 23, 2013 When Congress created the Renewable Fuel Standard Second, a viable domestic cellulosic biofuels industry (RFS) more than a decade ago, lawmakers hoped has not taken hold, with only a tiny fraction of the fuel the federal fuels program would spur development of mandated by the RFS actually being produced. a domestic biofuels industry that would help reduce oil imports with millions and millions of gallons of The fact is, Congressional mandates have failed to homegrown ethanol – with a particular focus on produce cellulosic biofuel and expand the domestic increasing volumes of cellulosic biofuel made from biofuels industry as envisioned, and our new energy corn stover, wood chips, miscanthus or other cellulosic realities have made the RFS obsolete. It is a broken feedstocks. By 2022, it was expected that 16 billion and outdated policy. Americans are not consuming as gallons of cellulosic biofuel would be produced, but a much gasoline as Congress estimated they would when couple of other things happened instead. the mandate was passed in 2007. That means RFS mandates could push higher ethanol concentrations into First, the U.S. energy revolution happened. Our crude gasoline than today’s vehicles or refueling infrastructure oil imports fell mostly because of surging domestic were designed to accommodate. oil production, not the RFS. Through safe hydraulic fracturing and horizontal drilling, American output grew from less than 6 million barrels per day to more than 9 million barrels per day – the growth in domestic production more than accounting for the reduction in net imports. The Renewable Fuel Standard: Page 3 Fill Up On Facts | November 2017 Outdated Supply and Demand Projections Motor Gasoline Consumption 1.8 1.7 1.6 1.5 1.4 1.3 hundred billion gallons per year hundred 1.2 1.1 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 AOE 2007 Actual and Projected Source:Source U.S. Energy Information Administration (EIA) The Energy Independence and Security Act of 2007 tenth of one percent of the volume congress had hoped (EISA) was legislation enacted under the assumptions for was actually produced. of declining domestic production of crude oil and far greater crude oil imports. Both of these assumptions Declining gasoline demand, combined with increasing have been completely reversed by the shale oil mandates, means we are at the limit of blending ethanol revolution, dramatically increasing North American into gasoline (10 percent ethanol or E10) for widespread energy production and increasing crude oil exports. The use. The EPA rushed through approval in allowing a U.S. is now a global oil and natural gas superpower— blended fuel with up to 15 percent ethanol (E15) without not because of biofuels, but through investment in the oil adequate testing. In addition to compatibility problems and gas industry and increases in domestic production. with E15, expanded use of another alternative fuel (E85) Our domestic oil and natural gas industry is achieving has not occurred due to poor consumer