The Renewable Fuel Standard (RFS) keeps United States’ energy dollars where they belong, powering America’s economy. With RFS we have reduced our dependence on foreign oil from 60 percent in 2005 to 45 percent today. And the potential benefits from advanced biofuels are even greater. Switchgrass alone has been shown to produce 540% more energy than it takes and emit 86 to 94% less greenhouse gas than gasoline.
The US biofuel industry is a cornerstone of the rural economy: supporting almost 500,000 American jobs and generating $53 billion in economic activity annually. In 2011 ethanol reduced gas prices by $1.09. Ethanol is also about $.40 cents cheaper than gasoline. In these difficult economic times, lowering gas prices makes a big difference for all consumers.
Waving goodbye to a true energy solution is exactly what waiving the RFS for this year is: an ineffective, short-term fix at the expense of long-term energy security and economic growth because of fluctuating political winds. America is in the midst of a historic drought. Support for the RFS and biofuels is essential to the livelihood of over 500,000 people and to the future of an America fueled by homegrown advanced biofuels. Crop and livestock producers, struggling with dry fields and increasing consolidation among buyers, are wrongly blaming the RFS for their troubles.
The RFS mandates 36 billion gallons of traditional (corn) and advanced biofuels be consumed in the U.S. transportation sector by 2022. While corn prices have increased dramatically, ethanol is not to blame. Prices have risen by more than 50 percent since mid-June, but ethanol production has actually fallen 15 percent since the beginning of the year. Bruce Babcock at Iowa State University recently (here) calculated completely eliminating the RFS would reduce corn prices by less than 5 percent. The RFS was designed to account for high corn prices; higher corn prices do not, after all, help the ethanol industry either. The ethanol industry stands with livestock producers when it comes to bidding on the corn supply.
Furthermore, ethanol production actually creates a valuable byproduct for livestock producers, Dry Distillers Grains Solubles (DDGS). DDGS is highly nutritious and commonly used as livestock feed. In fact, a third of the corn crop that goes towards ethanol production is converted into DDGS for the livestock sector.
Over the next several years, America has the chance to change the energy landscape by producing billions of gallons of advanced biofuels from non-food crops. However, producers interested in growing advanced biofuels depend on a long-term investment bearing fruit. The RFS is a clear market signal: now is the time to for dedicated energy crops and they are a safe investment. Because of a stable biofuels policy, dozens of companies have invested billions in demonstration plants across the country. We cannot afford to lose this momentum driving our energy future.
NFU strongly supports its livestock producing members, but waiving the RFS is not the answer to their economic woes. The RFS is helping American’s checkbooks and the environment right now and supporting a stable and sustainable United States energy future.