Renewable Fuels Standard Implementation Needs Refining

The U.S. Environmental Protection Agency (EPA) announced its proposed rule for the implementation of the Renewable Fuels Standard (RFS), the provision in last year’s Energy Policy Act requiring increasing amounts of ethanol and biodiesel to be used through 2012.

The proposed rule will specifically pertain to the RFS “credit trading” mechanism, which will govern how biofuel credits are generated, sold and purchased. In response to the propsed rule, Brian Jennings, American Coalition for Ethanol (ACE) Executive Vice President, made the following statement: “The enactment of the Renewable Fuels Standard is the single most significant step forward that Congress has taken in decades to secure our nation’s energy independence. The RFS is crucial to the future growth and success of the U.S. ethanol industry, and it is imperative that the proposed rule be simple yet enforceable. Congress intended for the RFS to be an annual program requiring blenders and others to meet annual obligations for biofuels use. An issue of key importance to ACE members is whether the proposed rule is consistent with the letter and spirit of the law with respect to credit trading. If not designed correctly, the RFS credit trading mechanism may permit an excessive number of credits or gallons to roll over from one year to another, thereby reducing biofuels demand and undermining the effectiveness and intent of the RFS program. It is critically important to prevent a proliferation of an unlimited number of credits. ACE looks forward to reviewing the proposed rule and offering substantive comments in the future. We very much appreciate the willingness of the EPA to consider our views on this extremely important rule, and we look forward to working with them on the implementation of the RFS. The ultimate test of the program’s effectiveness will be whether it ensures the minimum renewable fuels demand levels set forth by Congress are indeed met.”
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