Bingaman on RFS Effects on Energy Markets
February 7, 2008
10:39 AM
“Thank you all for coming today to discuss the Renewable Fuel Standard included in the Energy Independence and Security Act, which was signed into law on Dec. 19, 2007. This groundbreaking legislation will save more energy than all previous energy bills we have passed. Americans will spend less money on gasoline, as their cars and trucks get more miles per gallon. We will also spend less on our electricity bills, as inefficient incandescent light bulbs are phased out in favor of highly efficient compact fluorescents and LEDs. These measures will make us better stewards of our country’s energy resources. They are good for the environment, and they are good for our energy security.
“However, today’s hearing concerns the Renewable Fuel Standard (RFS), which is a cornerstone of this legislation and which some have suggested is flawed. The RFS requires that increasing amounts of our motor vehicle fuel come from biofuel, such as ethanol from corn and biodiesel from soy. Homegrown biofuels are good energy policy, good environmental policy and good national security policy. However, there is some concern that RFS as enacted risks taking the biofuels industry backward rather than pushing it ahead. I am particularly concerned about three aspects of the RFS: first, early year biofuel requirements could be too aggressive; second, mandates for specific technologies and feedstock could prove to be overly prescriptive; finally, the environmental restrictions may be too narrow.
“The RFS almost doubles the amount of ethanol and biodiesel required this year, from 4.7 billion gallons in 2007 to 9 billion gallons in 2008. While it appears likely that there will be enough ethanol and biodiesel production capacity to satisfy the requirement, it is not clear how all of this biofuel will find its way into the fuel tanks of our cars and trucks. Because the law was signed only weeks before the 2008 requirement came into effect, refiners had no opportunity to ensure that sufficient infrastructure would be in place to handle that much of an increase.
“The second concern is that the law favors certain technologies and feedstock with individual mandates. I am pleased that the requirement for cellulosic biofuel includes cellulosic biobutanol. Biobutanol is a very promising new technology that could turn woody biomass into biofuel that is compatible with our existing energy infrastructure, and I am glad that the world’s first commercial biobutanol plant might be located in my home state of New Mexico. However, the fact remains that this kind of micromanagement is likely to make government policy look foolish in the long run. What if a breakthrough in some other technology, like biocrude from algae, were to emerge as a cost-effective technology that is a better fit for the marketplace? With roughly 80 percent of the advanced biofuels requirement already dedicated to specific feedstock or technologies, there is little room in the RFS for technological advance.
“A final concern is the definition of ‘renewable biomass’ from which the required biofuel can be derived is too narrow. Examples of excluded feedstock include woody biomass from hazardous fuels reduction on Federal lands, and urban and commercial wood waste. On the other hand, old growth forests on Federal lands are not adequately protected in the legislation.
“The question before us now is how to make the RFS work. The cost of failure is high. If we cannot produce enough ethanol and biodiesel to meet these aggressive mandates, while maintaining food and fuel prices that consumers can afford, taxpayers will blame Congress, as they should. Furthermore, the biofuel industry will be tarnished. For these reasons, I am committed to finding a way to make this RFS work as intended.”
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