Fossil fuels rule market
The federal Renewable Fuel Standard will fall far short of the goals laid out by Congress, government watchdogs said, dealing another blow to the embattled program and giving more ammunition to critics who say it must be ended immediately.
Government Accountability Office reports say the Renewable Fuel Standard, enacted by lawmakers in 2007, has been crippled by higher-than-expected costs of producing ethanol and other biofuels and by the boom in U.S. oil and gas production, which has made fossil fuels far more competitive in the marketplace.
The program, which requires increasing amounts of ethanol and other biofuels to be blended into the nation’s gas supply each year, also will fail to deliver the kinds of reductions in greenhouse gas emissions envisioned a decade ago, the GAO said.
Taken together, the two conclusions raise doubts about the future of the Renewable Fuel Standard and support critics’ contention that the program is forcing the use of fuels that are too expensive and incompatible with many of today’s vehicles and infrastructure.
“Given that current advanced biofuel production is far below Renewable Fuel Standard (RFS) targets and those targets are increasing every year, it does not appear possible to meet statutory target volumes for advanced biofuels in the RFS under current market and regulatory conditions,” the GAO report reads in part. “Current production of cellulosic biofuels is far below the statutory volumes and, according to experts, there is limited potential for expanded production to meet future higher targets, in part because production costs are currently too high.”
Last week, the agency set a 2017 target of at least 19.28 billion gallons of ethanol and other biofuels to be blended into the nation’s gas supply. That is an increase over this year’s target of 18.11 billion gallons but is far below the target of 24 billion gallons set out in 2007 legislation that established the program.
One reason for the gap, the GAO report said, is a lack of incentives for more biofuels production or upgrades in infrastructure because of the relatively low cost of fossil fuels in the market.
Moving forward, the GAO says, the Renewable Fuel Standard faces a bleak future. Investments into ethanol and biofuels, the watchdog agency said, look to be drying up in the energy marketplace, which has been transformed by the boom of domestic oil and gas drilling over the past decade.
That uptick in fossil fuel production seems to have crushed incentives to invest in biofuels and made once-promising ethanol much less appealing.
“The shortfall of advanced biofuels is the result of high production costs, and the investments in further research and development required to make these fuels more cost-competitive with petroleum-based fuels even in the longer run are unlikely in the current investment climate,” the GAO said.
In response to the GAO studies, the EPA conceded that the original congressional timetable now is essentially irrelevant. The agency also cited the relatively low cost of fossil fuels, the cost of new biofuels technology needed to hit the targets and other factors.