EPA's 2014 RFS proposal puts carrot behind biodiesel industry

Congress put a carrot in front of the biofuels industries with the renewable fuel standard, but EPA's 2014 RFS volume proposal is an attempt to reposition that carrot behind the industry, a dangerous move for our energy future
By Ron Kotrba | January 15, 2014

When the first and second renewable fuel standards (collectively “RFS”) were passed in 2005 and 2007, Congressional intent was to grow the conventional and advanced U.S. biofuels industries by placing a carrot in front of them, spurring progress and growth through a farsighted commitment from the U.S. government that allows an entryway into the petroleum-locked transportation fuels market.

Just as U.S. paper currency is not backed by gold but by the full faith and credit of the U.S. government, laws that promise emerging industries like advanced biofuels a guaranteed market forward must also be worth more than the weight of paper on which RFS legislation was printed. But when EPA proposed stalling biodiesel growth and slashing advanced biofuel targets under this year’s RFS volume requirements—remember biodiesel is the only commercially available U.S. advanced biofuel to break the billion-gallon mark, and it has done so three years in a row now—investors and producers alike wondered how could they do this, and why?

Opponents to RFS and biodiesel often use the argument, “If biodiesel is such a great fuel, then why must the government require its use?” I believe the answer to this is quite obvious. Without government intervention in the form of gradually increasing mandates, biodiesel would remain locked out of the mainstream petroleum transportation fuels market because every percent of fossil diesel fuel that biodiesel displaces is lost profit for the wealthiest, most powerful corporations in the world.

For those who oppose RFS, for whatever reason, put the shoe on the other foot for a moment. You own a small business. Times are tough, particularly when competing with the local Big Box store with discount prices. The local government commits to its hometown small businesses by providing welcomed tax relief and special deductions that foster small business growth, keeping the mom-and-pop stores competitive in pricing and market opportunity. You, as a small business owner, invest in growing your business, as a result of these long-term commitments from your local government. Then, one day, without good reason, long before the tax breaks were targeted for sunset but just as their legislative intents were beginning to be realized, the council rescinds the tax breaks and you, as a small business owner, are left high and dry with your funds tied up in future growth based on a long-term commitment from your local government. Now what?

I assure you many of the people that furiously oppose RFS and, in general, government subsidies—whether it’s mandates, tax breaks, direct payments or other provisions—squeeze the most out of their personal or business tax returns through loopholes, deductions and other accounting wizardry. It’s a classic case of hypocrisy 101.

Another assertion is, “Biodiesel cannot stand on its own two feet without government support.” More than a year ago the Global Renewable Fuels Alliance reported how the world’s oil companies receive more than a half a trillion dollars in government subsidies. Just recently, in response to an article by Rebecca Leber on, in which she notes how even though Big Oil likes to pretend it doesn’t receive tax breaks and deductions from the U.S. government despite the fact that oil companies cash in on more than $4 billion in tax breaks annually, Americans United for Change Communications Director Jeremy Funk said, “We’re sure API President Jack Gerard just made an honest math error and forgot to carry nine zeroes somewhere in his calculations. Seriously, if Big Oil can lie so shamelessly about the taxpayer subsidies everyone knows they reap, why should the EPA believe a word of their trash talk about the renewable fuels industry? Big Oil wants nothing more than to be rid of their cheaper, cleaner competition, so whatever they say about [renewable fuels] during this critical comment period on the proposed RFS rule must be taken with a grain of tar sand. Big Oil may get a lot more than zero in tax payer subsidies, but there is exactly zero chance that Big Oil will ever come close to producing enough domestically to meet U.S. oil consumption. That’s why it makes no sense to abandon the renewable fuels industry now at a time it’s fulfilling 10 percent of our nation’s fuel needs and at a time it’s making incredible innovations that will fulfill more and more demand down the road.”

How many innovations that we rely on every day would not have been possible without government incentives or mandates? Too many to list, I assure you.

Another position taken against the RFS, one often posed by Big Oil itself, is, “The U.S. energy landscape has changed since 2007.” Yes, it has. But as I wrote in a blog post in November 2012, “While the energy landscape may have changed since 2007, some things haven’t. Oil is still nonrenewable. Fossil fuel is finite. Continued extraction of carbon-rich oil, natural gas and coal from deep underground for combustion and release into the atmosphere is expediting climate change … And the biggest thing that hasn’t changed since 2007 is that we still cannot trust Big Oil to do or say what’s in the public’s best interest.”  

Yesterday I spoke with Atul Deshmane, president of Whole Energy. He says the EPA’s 2014 RFS volume proposal takes that carrot and moves it behind those same biofuels industries Congress tried to foster nearly a decade ago. And that is a dangerous move for our future.