The renewable fuel standard works for rural America and our economy

The renewable fuel standard works for rural America and our economy
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Political posturing from a small segment of the petroleum industry has the Trump administration considering damaging changes to our most successful American energy policies that we’ve seen in decades: the renewable fuel standard. The RFS was passed by a bipartisan Congress and signed into law by President George W. Bush more than a decade ago, provides an avenue for domestic biofuels producers to gain access to the U.S. transportation fuels market, which has been monopolized by the petroleum industry for more than a century.

The results of the program have been impressive. Americans now enjoy the benefits of increased jobs, economic growth in rural America, and more clean-burning fuels like biodiesel being used in school buses, emergency vehicles, and trucking fleets across the country. That is success worth celebrating.

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All of these benefits can continue to grow under the leadership of this administration, but a deal currently being peddled to the White House by some in the oil industry to cap the price of renewable identification numbers, or RINs, will threaten these benefits that Americans enjoy from the growth of a renewable fuels industry. The president should reject these half-baked ideas that come from those who have never wanted to open up their markets to competition.

A RIN is simply the mechanism for tracking renewable fuels within the program. The RFS is designed to pull real fuels into the marketplace and the petroleum industry has the option to physically blend the fuels themselves, or purchase compliance credits from others in the industry who have blended the fuel above and beyond their obligation. This economic piece was the foresight of Congress to build in flexibility and also ensure there was economic incentive for those obligated under the RFS to physically blend the fuels.

Those who are arguing for the cost of those credits to be capped are arguing to take the teeth out of the program. It would undermine the ability to grow the renewable fuels industry. While much of the discussion around changing the RFS has been related to ethanol, it is clear that a cap on ethanol credit prices would especially affect the biodiesel industry adversely. Biodiesel is the first “advanced fuel” to achieve commercial production levels nationwide, reducing carbon emissions by more than 80 percent on average.

Analysis by the National Biodiesel Board and the World Agricultural Economic and Environmental Services found that capping the price of conventional biofuel RINs would significantly harm the production of biodiesel and related industries. This harm includes a reduction of up to 300 million gallons in biomass-based diesel volumes each year, $185 million more in feed costs for livestock producers, likely leading to an increase in food costs for consumers, and $0.16 less per bushel for soybeans.

The point is, if the administration rewards a small handful of refiners who have cried foul, there will be real damage done to the biodiesel industry. The recent bankruptcy filing of Philadelphia Energy Solutions and the dishonest blame they have tried to pin on the RFS is an outrage. The U.S. biodiesel industry is a spectacular success that currently supports over 64,000 jobs across the country, more than $11 billion in economic impact, and has significant room for additional growth.

Those pushing for changes like a RIN cap say they want a “win-win” solution. But they are pushing to fix something that isn’t broken with a plan that will be a loser for the renewable fuels industry. The Trump administration shouldn’t try to appease this small segment of refiners who oppose the RFS program at the expense of biodiesel and rural America. The RFS is not broken. It works. The president has been a supporter of the RFS, and he is in a position to make decisions that will continue to grow renewable fuels in America’s future.

Byron Dorgan is a North Dakota Democrat who served in the U.S. Senate for 16 years. He sat on the Senate Energy Committee and was one of the original authors of the renewable fuel standard. He is now a senior policy adviser at Arent Fox, whose clients include the National Biodiesel Board.