Testimony: Renewable Fuel Standard Program – EPA

Good morning, and thank you for the opportunity to share the views of the R Street Institute with you this morning. The R Street Institute is a pragmatic, free market think tank headquartered in Washington, DC, with regional offices spread throughout the country. Since our founding in June 2012, we’ve worked to advance market-based solutions to our nation’s most pressing policy challenges, including those facing our energy economy.

We at the R Street Institute are a bit unique amongst our cohort of center-right leaning think tanks in our willingness to aggressively ferret out solutions to deal with the challenge of climate change. We’ve advocated for a revenue neutral carbon tax rather than burdensome regulations, and we’ve worked tirelessly to end profligate government spending that also harms the environment and worsens the downsides of a changing climate.

However, our desire to see smart policy solutions that reduce greenhouse gas emissions does not translate into support for the renewable fuel standard. Since its inception, the RFS has served as a market-distorting, overly bureaucratic solution with disastrous unintended consequences, both for the economy and, sadly, the very environment it was meant to protect. The RFS serves as a classic example of the government picking winners and losers, with powerful lobbies in agriculture winning at the expense of refiners, livestock producers, and consumers.

RFS mandates have shifted US crop production away from food products like edible corn and soybeans and toward the type of corn used to produce ethanol. This shift increases costs across the board, and has disastrous impacts well beyond our borders. In addition to higher costs, RFS encourages overplanting, converting land into corn production and polluting our air and waterways. In the end, the destruction and extra emissions created by RFS well outweigh the environmental benefits the policy seeks to create.

While we are heartened to see that the proposed 2019 RFS does not harmfully raise the volume requirements, we feel it is imperative to point out the misguided nature of the standard to begin with. The overly-bureaucratic RFS boxes EPA, and therefore millions of American consumers, into a path that is impossible to ground in reality. As a recent court case shows, when EPA tries to align fuel volumes with actual demand, the agency is shot down, forcing companies to create a product that won’t be bought in favor of meeting the out-of-touch original mandate.

Rather than continuing down this failed path, we at R Street encourage the EPA to work with congress to pass reform that works. The federal government does have a role to play in creating the environment where new fuels and technologies can take root in the marketplace, reducing our emissions and preserving our environment for our citizens and generations to come. Sadly, the RFS does not fit the bill, and the new EPA should seek better solutions.

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