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GAO Testimony: Low Oil Prices Keeping U.S. from Meeting Federal Renewable Fuel Mandates

January 6, 2017

Government officials admitted in Senate testimony U.S. ethanol producers have failed to meet federal renewable fuels mandates and biofuel production has failed to reduce greenhouse gas emissions.

Officials from the U.S. Government Accountability Office (GAO) testified before a hearing held by the Senate Subcommittee on Regulatory Affairs and Federal Management, ethanol producers have been consistently unable to meet federal renewable fuel mandates. The subcommittee hearing concerned two reports by the GAO detailing how the ethanol mandate has failed to reduce greenhouse gas emissions and why the U.S. has been repeatedly unable to meet the statutory renewable fuel targets set in Energy Independence and Security Act of 2007. The Renewable Fuel Standard requires a minimum amount of ethanol and other biofuels be blended in to the nation's gasoline and diesel fuel each year.               

At the Senate hearing Frank Rusco, director of natural resources and environment division of the GAO said, “The most salient finding here is that it is unlikely that advanced biofuels can meet the statutory targets … [t]hey fell below targets by well over 1 billion gallons in 2014 and we’re expecting a 5 billion gallon shortfall for 2017.”

In particular, development of cellulosic ethanol, ethanol made from switch grass and other fibrous materials, as opposed to corn or sugar, has been particularly slow to develop. The reason: the low price of oil and gasoline.

“The price of gas is too cheap,” testified Janet McCabe, Acting Assistant Administrator for the Office of Air and Radiation. “If gas was $5 per gallon, there would be more incentive. Or the cost of ethanol or cellulosic fuel would be closer in price.”

Rusco also pointed to the recent low price of oil, and the slow economic growth since 2005, as the reason most investors refused to invest in biofuel production.

Time for Repeal

In a statement released at the conclusion of the hearing, Sen. James Lankford (R-OK), chairman of Regulatory Affairs Subcommittee, said the repeated failure of the renewable fuels program to meet specified targets, and its broader goals to reduce greenhouse gas emissions, shows the entire mandate should be repealed.

“The RFS program isn’t meeting the greenhouse gas emission goals, it is unsustainable, and it yields few benefits, while it has inflicted substantial costs on consumers,” Lankford's statement said. “The renewable fuel standard mandate simply doesn’t work ... it is time for Congress to repeal the Renewable Fuel Standard mandate.”

The American Petroleum Institute (API) also issued a statement at the conclusion of the hearings, with Frank Macchiarola, director of API Downstream Group stating “The GAO concluded the RFS is broken and we agree. The government findings that ethanol mandate is not working only strengthen our case to significant overhaul the program.”

 

H. Sterling Burnett, Ph.D., (hsburnett@heartland.org) is the managing editor of Environment & Climate News.

INTERNET INFO

Staff, “RENEWABLE FUEL STANDARD,Program Unlikely to Meet Its Targets for Reducing Greenhouse Gas Emissions,” Government Accountability Office, November 2016; https://www.heartland.org/publications-resources/publications/renewable-fuel-standardprogram-unlikely-to-meet-its-targets-for-reducing-greenhouse-gas-emissions

Staff, “RENEWABLE FUEL STANDARD, Low Expected Production Volumes Make It Unlikely That Advanced Biofuels Can Meet Increasing Targets,” Government Accountability Office, November 2016; https://www.heartland.org/publications-resources/publications/renewable-fuel-standard-low-expected-production-volumes-make-it-unlikely-that-advanced-biofuels-can-meet-increasing-targets

Author
H. Sterling Burnett, Ph.D. is a Heartland research fellow on environmental policy and managing editor of Environment & Climate News.
hsburnett@heartland.org

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