Chances are, you haven’t heard of RFS, RINs, eRINs, RVOs, or maybe even RNG. I hadn’t.
But if you are part of the agricultural and waste-industry interests that promote “biofuels,” you know all about them. They are the means by which fuel generated by corn, wood, waste from a landfill, or other “natural” biomass gets into your gasoline in the form of ethanol (at one time called gasohol)—or into other fuel like jet fuel.
As economists know, the push toward biofuels illustrates the “special interest effect.” Concentrated interests have a lot to gain or lose from government regulations, while the costs are so dispersed that most of us, understandably, are clueless.
The EPA just announced its RFS—Renewable Fuel Standard—for the next three years. That is the amount of “biomass-based” fuel that must be blended into other fuels during the next three years, writes Jacob Wallace in Waste Dive. From 20.63 billion gallons in 2022, the renewable fuel standard will raise the required number of gallons to 22.33 billion in 2025.
If they can’t meet their quota, gasoline producers or blenders must buy credits (RINs or “Renewable Identification Numbers”). A RIN means one gallon of renewable fuel. An obligation to buy a certain number of RINs is an RVO (renewable volume obligation). Some small refineries are exempted from having to meet RVOs, but larger ones are not.
Not Enough for the Special Interests
But ethanol producers such as Archer Daniels Midland are unhappy because the new standard didn’t increase the required volumes of conventional ethanol.
That’s because there are many kinds of biofuels (four major categories, such as “advanced” and “cellulosic” biofuels). The EPA raised the volume requirements for the others, but not “conventional” biofuel, or ethanol. And it didn’t adopt what could have been a really big mandatory boost in ethanol requirements—expanded use of 15-percent ethanol rather than today’s widely used 10 percent.
The biofuel association Growth Power says:
“EPA’s decision to lower its ambitions for conventional biofuels runs counter to the direction set by Congress and will needlessly slow progress toward this administration’s climate goals.
“We should be expanding market opportunities for higher blends like E15, not leaving carbon reductions on the table.” (E15 is gasoline with 15 percent ethanol.)
In other words, in the view of Growth Power, the EPA did not address the real problem—producing and selling more corn!
Agricultural lobbyists are somewhat at odds with waste-industry lobbyists, however. Some companies that manage landfills currently benefit from selling methane produced from landfill waste for which they receive credits. But they would have liked to see credits for the electricity that some Waste-to-Energy or WTE plants produce from the methane. (These would be called eRINs. The EPA was initially going to include them but did not. At least one company was contemplating expanding its WTE infrastructure.)
Waste industry lobbyists did get some help, however. Some will benefit from the increase in gallons of required cellulosic biofuel. And a “tweak” in the law, says Wallace of Waste Dive, allows production of more waste food-based biogas. This will expand the amount for which these industrial producers can get credits.
Back to ethanol. Lobbyists may be unhappy, but the Biden administration helped them out this spring when it allowed gasoline to contain 15 percent ethanol this summer. On its face, that violates the Clean Air Act provisions because it can encourage smog in warm weather; however, the act allows a waiver in case of emergency.
The emergency appears to be high gasoline prices. To quote from the EPA press release: “As a result of the ongoing war in Ukraine, Administrator [Michael] Regan determined that extreme and unusual fuel supply circumstances exist and has granted a temporary waiver to help ensure that an adequate supply of gasoline is available.” To be sure, E15 is sold in relatively few stations across the country.
Why is ethanol in gasoline, anyway? The original rationale is pretty much forgotten: It was to stretch fuel supplies after the 1973 oil embargo by producing fuel that could be blended with traditional gasoline. Later, it was used to boost octane when lead was removed from gasoline (and an alternative, MTBE, was found to be dangerous). More recently, its role has been to reduce greenhouse gas emissions. Thus, ethanol is the leading gasoline additive thanks to a lot of government interventions. To sum up, they included:
- favorable regulations
- revisions of regulations when problems cropped up
- the elimination of the federal motor-fuel excise tax on ethanol
- later, turning the elimination of a tax into a tax credit
- and even $1 billion for production facilities.
These are listed in a 2019 paper by Caley Johnson et al. The authors explain that the 10 percent requirement for ethanol “was brought about through generations of policies motivated by multiple factors related to energy security, health, air quality, and climate protection.”
By the way, ethanol does increase octane levels, so without the subsidies and regulations, producers would buy some ethanol—but maybe three percent, not ten or 15 percent. At 10 percent levels, the effects don’t harm most cars, but ethanol does reduce mileage efficiency by 3 to 4 percent. Then there is E15. It can be used safely by 90 percent of U.S. cars (those from the 2001 model year and later), says the EPA. There is also an E85 for special vehicles but let’s leave that for another time, if ever.
Cornfield image by enneafive is licensed under Creative Commons BY 2.0.