Rejection of the RFS waiver highlights need to move forward

Today, the EPA rejected Texas's request to waive the renewable fuel requirements established under the renewable fuel standard. For EPA to have approved the waiver, the agency would have had to agree with Texas' argument that a) the corn ethanol being required under the RFS is causing the economic hardship to the livestock industry and Texas citizens and b) that waiving the RFS requirements would reduce the levels of corn ethanol produced and thereby reduced the hardship.

There can be no doubt that corn ethanol is driving up the cost of feed for the livestock industry and driving up the cost of grains around the world. How much is the subject of much debate. The economic modeling finds anywhere from 10 percent to 75 percent of the increase in the price of food is attributable to biofuels.

More importantly though, it's not at all clear that waiving the RFS would reduce the volumes of ethanol produced. Every year since the original RFS was adopted in 2005, the oil companies have consumed more ethanol than required under the standard. As Matt Wald noted in his article in the NY Times today:

The effect of the decision on fuel and food markets is hard to determine. Recently, high energy prices have led to even more ethanol production than the quota required. On the other hand, rising corn prices made some ethanol operations unprofitable, especially as oil prices started to fall.

Ultimately, I believe that a waiver is just tinkering around the edge. Congress needs to get in the act and do more to move the biofuels industry beyond today's technologies and towards better environmental performance. This means replacing the mix of technology and feedstock specific tax credits with a single, technology-neutral, performance-based incentive. Today we are wasting billions of tax payer dollars paying for corn ethanol facilities that were full paid off years ago. We should get more for our money. We should get more water efficiency, less fertilizer runoff, better soil and wildlife management and we should avoid encouraging competition with food production.

We also need to aggressively and effectively implement the environmental safeguards in the the RFS. These safeguards are the best way to minimize the impact of the RFS on food prices and global warming pollution while protecting our wild forests and grass lands. Whether corn or switchgrass the real food vs. fuel problem is taking food producing land and turning it into fuel producing land.  The RFS climate safeguards make sure this type of land switching is accounted for and thus provide a direct disincentive to using feedstocks that displace agriculture land—and food.