Biofuels Producers ask President Obama to Stay the Course on the RFS

Biofuels & Climate Change

Earlier this month eight biofuel industry organizations formed the Biofuels Producers Coordinating Council to advocate for national policy advancing biofuel technology. Brent Erickson, executive vice president of BIO’s Industrial and Environmental Section is a member along with Michael McAdams, Advanced Biofuels Association; Brooke Coleman, Advanced Ethanol Council; Mary Rosenthal, Algal Biomass Organization; Brian Jennings, American Coalition for Ethanol; Tom Buis, Growth Energy; Anne Steckel, National Biodiesel Board; and Bob Dinneen, Renewable Fuels Association.

The group sent a letter to President Obama today asking him to stay the course on the Renewable Fuel Standard (RFS). The RFS is the bedrock policy for the advanced biofuels industry and it sets a clear path for U.S. energy security, reduced reliance on foreign oil and a cleaner environment. And it’s working.

The letter acknowledges challenges facing our country in light of the drought, but cautions against rushing into long-term policy changes in response to short-term conditions. Granting waivers for the RFS, as requested by the governors of several states, will provide no immediate relief to animal producers or farmers impacted by the drought, but could have unintended economic impacts on farmers and biofuel producers over several years.

Waiving the RFS will in fact not have any significant impact on short-term grain prices. A Purdue University study found that granting a waiver would only reduce corn prices by an estimated 5.6 percent in 2013. The RFS already has built-in provisions to provide market relief such as allowing refiners to meet their ethanol obligations with credits accumulated in previous years. Mechanisms like this should be allowed to work rather than granting a waiver that will not provide relief, but instead weaken the domestic biofuels industry over the long term.

The letter also tells President Obama that any theoretical reduction in grain prices could be counterbalanced by an increase in gas prices. Economists at the University of Wisconsin and Iowa State University conducted a study showing ethanol reduced the average American household’s spending on gasoline by more than $1,200 last year.

Waiving the RFS will also chill investment in advanced biofuels. Building biorefineries requires large capital investments, but capital formation has been hampered by the recent economic downturn. New biorefineries are under construction in nearly every state across the country, and a stable RFS ensures continued development. Federal leadership and policy stability is needed to assure investors.

The letter’s final point drives home how important the biofuels industry has been, and will continue to be, to our nation’s economic recovery. Even during challenging economic times, the U.S. biofuel industry has grown to employ almost 500,000 Americans and generate $53 billion in economic activity each year. As the industry continues to develop, it could add as many as 800,000 new employment opportunities, grow annual economic activity by an additional $37 billion, and further reduce U.S. dependence on foreign oil.

Supporting the RFS is a vote to support America’s future economic and national security. It is the anchor for a set of policies that support the creation of the biobased economy.

Read the full letter here.

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