The Renewable Fuel Standard
The RFS = U.S. Manufacturing
THE POLICY
The Renewable Fuel Standard (RFS) is a bipartisan American energy policy signed into law in 2005 by President George W. Bush and expanded in 2007.
It ensures that rising volumes of homegrown biofuels are available to consumers as part of the fuel mix, generating new options at the gas pump and protecting American consumers from volatile global oil markets.
Under the RFS, billions of dollars of have been invested into conventional and advanced biofuel production – establishing the United States as the global leader in biofuel production capacity.
Homegrown biofuels slash U.S. reliance on foreign oil, decrease emissions, create manufacturing jobs, and stimulate economies in more than 30 U.S. states.
HOW IT WORKS
While Congress set RFS volumetric blending targets when it enacted the law, it provided the U.S. Environmental Protection Agency (EPA) with the authority to implement the law.
EPA sets the RFS biofuel blending requirements for oil companies – in an annual rule called the “Renewable Volume Obligation” (RVO) — and ensures that RFS blending requirements are met by all obligated parties.
The driver behind RFS compliance is the RIN (or Renewable Identification Number). Each gallon of RFS-eligible biofuel produced comes with a unique RIN. To demonstrate compliance, oil companies retire (with EPA) the number of RINs equal to their per-gallon compliance obligation.
RINs also enable compliance flexibility. Some oil companies choose not to blend physical gallons of renewable fuel, opting instead to secure RINs on an open market (usually from other oil companies). While there is a cost to acquiring RINs, federal agencies have repeatedly concluded that RIN purchasers recover their RIN costs, and RINs do not increase gas prices.
THE RFS = U.S. MANUFACTURING
According to a recent report, the distribution of U.S. bioeconomy employment touches every U.S. state, with more than $1 billion in total output impacts in more than 25 states.
Biofuels are currently the largest sector within the U.S. biomanufacturing sector. As such, Midwestern states with large biofuel production capacity often have the greatest economic returns. However, other states (NC, CA, TX) also have large biomanufacturing sectors and employment rates.
The U.S. industrial bioeconomy depends on labor, biomass, other materials, goods and services that cannot be economically sourced overseas.
The U.S. industrial bioeconomy relies almost exclusively on local suppliers, often within close proximity to manufacturing facilities, for core feedstocks and commodity inputs.
A considerable competitive and policy advantage of these industrial bioeconomy jobs is their tie to U.S. soil, both literally and figuratively - these jobs are here to stay.
