Congress Should Reject RFS ‘Reform’ | Commentary
Opponents of renewable-energy development, led by the oil and gas industry, have spent the last year waging a campaign to get Congress to stop the development of advanced biofuels cold by gutting the renewable-fuel standard. Committees in both the House and Senate have held hearings on the RFS and bills have been introduced in both houses to radically “reform” and eliminate the policy. But developing the next generation of biofuels is critical to reducing our nation’s dependence on oil, lowering greenhouse gas emissions and generating jobs and economic growth in rural America. For the sake of our national security, our environment, American consumers and the economic well-being of America’s agricultural communities, we can’t let them succeed.
Advanced biofuels, such as cellulosic ethanol, utilize biomass and plant waste for its raw material, rather than food product sources. This material, which currently goes unused, is abundant across America’s agricultural heartland and can provide farmers with an additional revenue stream from their crops.
A study by Argonne National Laboratory found that burning cellulosic ethanol releases 85 percent less greenhouse gas emissions than burning gasoline. And, according to a recent industry survey by Bloomberg New Energy Finance, these fuels are projected to reach cost parity with corn-based ethanol — now the most widely used form of biofuel — by 2016.
The renewable-fuel standard doesn’t cost taxpayers anything. It’s not a tax grant or subsidy. It simply requires oil companies to blend ethanol and biodiesel into their gasoline, creating a market for these fuels, which spurs innovation and private investment, while at the same time reducing our nation’s dependence on foreign oil.
DSM, a global life sciences and material sciences company, has invested $150 million in Project Liberty — a joint venture with Poet LLC — to build a commercial-scale cellulosic ethanol plant co-located with a corn ethanol plant in Emmetsburg, Iowa. Expected to come online early next year, the pilot plant is scaling up to produce 25 million gallons of cellulosic ethanol a year out of corncobs, leaves, husk and stalk. It’ll create 80 indirect jobs and 40-50 at the plant. Rolling out Project Liberty to all 27 plants in Poet’s network could generate an economic investment of up to $5.4 billion, with 1,350 permanent jobs.
Investing in advanced biofuels created from renewable sources offers us a brighter future than propping up a government-subsidized 100-year-old monopoly.
The early petroleum industry lost a battle to protect its lucrative business of selling kerosene for lighting as electricity took its place. Gasoline, a byproduct of kerosene, moved to center stage as a transportation fuel. At the time, the new Model T’s could run on ethanol or gasoline. Ethanol was widely available because local shops and family farms often ran their own stills. Henry Ford figured ethanol would become the transportation fuel of choice, but then came the Prohibition movement and 18th Amendment. Drawing support from John D. Rockefeller, the measure had killed off ethanol as a car fuel by the time it was repealed in 1933.
Today, some $4 billion in direct federal subsidies go to the oil and gas industry annually even as oil prices promise to remain at the lofty level of $100 a barrel and climb higher. Indirect subsidies such as infrastructure support and the United States’ sizable military presence in the Persian Gulf add an extra $50 billion to $100 billion a year to help Big Oil.
The renewable-fuel standard now assures that currently 10 percent, and in the future more, of the gasoline we use to run our cars and trucks contains ethanol. Without the standard, the ethanol component of gasoline would likely drop to the lower threshold of 4 percent to meet other fuel requirements. And what would make up the difference? Approximately $47 billion worth of petroleum. No wonder oil interests are encouraging a “reform” of the renewable-fuel standard. Home-grown renewable American fuel hurts multinational oil company profits, and the profits of the foreign oil-producing countries, while it reduces the price American consumers pay at the pump and creates American jobs that can be outsourced.
In 2007, when President George W. Bush asked Congress to expand the RFS he said, “It is in our vital interest to diversify America’s energy supply — and the way forward is through technology.” That statement remains true today, and the investment in new technology sparked by the RFS is paying off. Congress should reject any move to reopen, reform or reduce the RFS. The RFS is working.
Hugh Welsh is president of DSM North America, a Dutch-based life sciences and materials sciences company with more than 4,000 employees across the United States.