The Obama administration has vocalized its continued support for the Renewable Fuels Standard (RFS) by rebuffing “alarmist calls” for its end. Last week, Renewable Fuels President (RFA) and CEO Bob Dinneen wrote a letter to U.S. Agriculture Secretary Tom Vilsack and Environmental Protection Agency (EPA) Administrator Lisa Jackson thanking them for acting responsibly in the wake of calls to modify or dismantle the RFS. Dinneen has been on record multiple times saying changes to the RFS are “simply not warranted.”
Dinneen wrote, “Your comments have provided the kind of certainty and security that is necessary to ensure the renewable fuels industry continues to evolve. Further, your agencies’ recent remarks regarding the RFS serve as important signals to the investment community that the nation’s commitment to diversifying our fuel supply and creating a future market for new advanced biofuel technologies remains intact,” Dinneen wrote.
Opposers of RFS have gained some momentum of late using the record breaking drought conditions as an example of why the RFS will not work. However, Dinneen says the RFS has “tremendous flexibility built into the RFS program” by way of Renewable Identification Numbers (RINs) that allow obligated parties to “bank” credits.
According to research released last week by Iowa State University professor Bruce Babcock, there are an estimated 2.4-2.6 billion RINS available and a reduction in the RFS might only serve to lower corn prices by 4.6 percent. In addition when corn prices began to rise, says Dinneen, ethanol consumption of corn fell nearly 14 percent, a two-year low, while exports increased nearly 15 percent.
Dinneen concludes that waiving RFS mandates will not serve its intended purpose and market signals along with the flexibility of the RFS are working.