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Opinion: Alternatives to the RFS

by Doug Williams

Recently, the Energy Resources Center made headlines by saying the EPA’s shift on the Renewable Fuel Standard (RFS) would equal adding 1 million more passenger vehicles on the road. (Earlier post.) The RFS has been controversial from its beginnings in the early 2000’s. It’s also a political lightning rod given the stagnation of fuel consumption matched with accelerating ethanol blending.

The oil industry would seem to be understandably upset about it. The expansion of the RFS in 2007 goes far beyond just replacing MTBE with ethanol as the required fuel oxygenate (and avoiding lawsuits). Given the stagnant US fuel market, every gallon of biofuel blended into the mix cannibalizes fossil fuel demand. It seems as though when the RFS was conceived, no one could have thought that fuel consumption would have flat-lined. But is there a better way? There are options for continuing our commitment towards renewable fuels to secure US energy requirements. Let’s look a few here.

Carbon Intensity

California implemented its Low Carbon Fuel Standard (LCFS) starting in 2010 as part of its effort to regulate CO2 emissions on top of the fuel blending requirements. The goal was to reduce fuel carbon intensity (CI) by 10% in 10 years (between 2010 and 2020). It’s an easy concept: every fuel option receives a CI score and each year, fuel sellers must sell a fuel blend that matches that year’s carbon intensity requirement.

On its face, it’s a simple program. But the details are damaging. I like the idea of letting the market decide which fuels blends to select. But the math makes fossil fuels a no-go fuel option. There’s no way to get gasoline (CI score: 95) to hit the 86 level without severe cannibalization of their gasoline business.

The oil industry responded. Larger companies such as BP, Exxon, and Valero have all sold or attempted to sell their refineries in the state. California, then, has become a very hard place for oil companies to do business.

This is all understandable. If the objective is to get the oil companies to drive compliance through their own investment choices, than causing them to kill a large amount of their gasoline business within a decade is not going drive this change. The real issue is the lack of commercially available very low carbon intensity fuel alternatives. That’s the only missing element to this approach.

No mandates, but blend credits

Another option would be to eliminate the blending mandate and provide a direct incentive (i.e. tax credit) for blending biofuels. Presumably, the blender’s credit would need to be significant in order to maximize compliance.

This isn’t new; we had a blender’s credit for decades and it worked pretty well. It was meant as an incentive for adoption. It was removed after there was significant participation by the market.

The shortcoming is that an oil company’s incentives may still orient them around using fossil fuels. The oil industry has hundreds of billions invested in oil infrastructure. Even small reductions in capacity to, say, oil refineries, could mean the difference between profitability and not. So it’s not clear that we could outright pay the oil companies to blend biofuels at the expense of fossil fuels—at least beyond a certain point (i.e. use as an additive).

Unrenewable Fuel Standard

Perhaps most controversial would be essentially to flip the RFS on its head: rather than an annual, fixed blend requirement for renewable fuels, there would be an annual fixed blend requirement for gasoline and diesel.

This is obviously controversial, but I actually think it would benefit all parties. There’s no upside limit to renewable fuels further driving their adoption. The oil companies have all of their downstream demand guaranteed by Congress. Since the US isn’t really a growth market anymore, domestic producers will want to orient around becoming an export market while managing US assets with perfect future (say 50 years) visibility.

The RFS has served its purpose since its inception in the last decade. But as consternation grows around its future, we should recognize that there are alternatives that may serve our collective goals as well.

Doug Williams is a business development consultant for biofuels and bio-based materials start-ups. He currently lives in the San Francisco Bay Area and is the author of “Advancing Fuels: A review of the challenges facing the emerging advanced biofuels industry” (



So, your implying it's up to Congress to make sure the wealth of International Oil company continues per their huge investments? That the law should protect their market to ensure their high rate of return investments? What ever happen to small business concerns? You know the primary employer of the nation. The oil cartel has no such mercy upon ravaging American consumer. Why the big need to come to their rescue? Look at the health harming choice of leaded gas with full knowledge of harm. Same with MTBE water pollution or the current carcinogenic octane boost chemicals utilized to avoid cheaper ethanol.
So, petrol doesn't like ethanol as it's not their product and won't conform to RFS law. What would Congress do if small business didn't like or abide by their laws?


What "cheaper ethanol?" If it were that cheap there would be no issue replacing MTBE. The fact is, the feds disallow any ethanol that is produced at a refinery, as opposed to 'renewable' sources. "Current carcinogenic octane boost chemicals?" Which are you referring to? The point here is consumers like clean, non-fouling gasoline, which is a rationale for octane. Try in vain to convince some people to switch from name brands to discount gasoline retailers. The policy solution is to eliminate octane discretion in car brands, and design all cars with the Tiger in the Tank. There is no evidence that ethanol means higher octane performance in current model cars. That is an engine design issue, not a fuel mandate issue.

A real solution to ethanol is to reintroduce the PIK (Payment-in-Kind) system to corn farming. This would replace subsidies with a quota of corn creditable to farmers and other players if a break even price were not reached. For ethanol distillers, it would lend cheap reserves of corn to distillers who find the combined costs of corn and energy too high for production, but financial responsibilities would now shift to the industry, not taxpayers.


Current carcinogenic octane boosters are the aromatics that would otherwise be removed because they are a higher value feedstock, but are good octane enhancers. So, when a cheap octane enhancer is used TEL or MTBE, then the aromatics are taken out. However when you can't use the cheap enhancers, you leave a larger aromatic content which makes the gas more carcinogenic.

Engines can be designed to burn anything practically, but what they are designed to burn is what is most profitable regardless of the environmental or health issues.


@ Emily

It goes farther than that. Let's not forget Exxon knew of climate change for more than 30 years, and covered it up. They knew as early as 1981, 7 years before it became public knowledge. Let's not forget and let's not reward them (or any of the other fossil fuel pushers) with our continuing business.



Some good points. I think the RFS has brought a number of benefits around carbon reduction, reduced oil imports, and rural development and jobs. Also the competition between ethanol and gasoline has brought overall reduced fuel costs.

Looking at future policies, I think the first item is to define what the goals are. Is it just climate change or are there broader goals? Beyond that, I think the policies need to be consistent and long term in nature. I like the concept of the LCFS for carbon reduction as it should push towards the most economic choice (in theory). There could, of course, be improvements in how it has been implemented.


Ok, now it seems that Exxon knew about climate change even earlier than 81. They knew in 1977;

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