Renewable Fuel Standard (RFS): Overview and Issues [March 14, 2013]   [open pdf - 537KB]

"Increasing dependence on foreign sources of crude oil, concerns over global climate change, and the desire to promote domestic rural economies have raised interest in renewable biofuels as an alternative to petroleum in the U.S. transportation sector. In response to this interest, U.S. policymakers have enacted an increasing variety of policies, at both the state and federal levels, to directly support U.S. biofuels production and use (although some of these policies have expired). Policy measures have included blending and production tax credits to lower the cost of biofuels to end users, an import tariff to protect domestic ethanol from cheaper foreign-produced ethanol, research grants to stimulate the development of new biofuels technologies, loans and loan guarantees to facilitate the development of biofuels production and distribution infrastructure, and, perhaps most important, minimum usage requirements to guarantee a market for biofuels irrespective of their cost. As a result of expanding policy support, biofuels (primarily corn-based ethanol and biodiesel) production has grown significantly (up over 600%) since the early 2000s. However, despite the rapid growth, U.S. biofuels consumption remains small as a component of U.S. motor fuels, comprising about 5.7% of total transportation fuel consumption (on a gasolineequivalent basis) in 2012. Initially, the most significant federal programs for supporting biofuels were tax credits for the production or blending of ethanol and biodiesel into the nation's fuel supply. However, under the Renewable Fuel Standard (RFS)--first established in 2005, then greatly expanded in 2007 (as described below)--Congress mandated biofuels use. In the long term, the expanded RFS usage mandate is likely to prove more significant than tax incentives in promoting the use of these fuels. This report focuses specifically on the RFS. It describes the general nature of the biofuels RFS and its implementation, and outlines some of the emerging issues related to the sustainability of the continued growth in U.S. biofuels production needed to fulfill the expanding RFS mandate, as well as the emergence of potential unintended consequences of this rapid expansion. This report does not address the broader public policy issue of how best to support U.S. energy policy."

Report Number:
CRS Report for Congress, R40155
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