Analysis Shows Benefits of 8 Billion RFS Mandate

Renewable Fuels Association analysis finds larger mandate in energy package will stimulate economic growth. Compiled by staff

Published on: May 23, 2005

An economic analysis released today by the Renewable Fuels Association highlights the substantial positive impact of an 8 billion-gallon RFS. Citing the importance to job creation and rural America, the RFA urged the U.S. Senate to adopt an 8 billion-gallon per year renewable fuels standard (RFS) as part of its comprehensive energy legislation.

According to an analysis conducted by John Urbanchuk with LECG, LLC, establishing an 8 billion-gallon RFS between 2005 and 2012 would:

  • Spark $6 billion (2005 dollars) of new investment to build 4.3 billion gallons of new ethanol capacity;
  • Add nearly $200 billion (2005 dollars) to GDP;
  • Generate an additional $43 billion (2005 dollars) of household income for all Americans;
  • Create more than 230,000 new jobs in all sectors of the economy;
  • Displace over 2 billion barrels of crude oil;
  • Reduce the outflow of dollars largely to foreign oil producers by $64.1 billion (2005 dollars); and,
  • Lessen America’s dependence on imported oil from an estimated 67.4% to 62.3%.

"The goal of an RFS is not to just keep pace, but to displace imported petroleum and enhance U.S. energy security," says RFA President Bob Dinneen. "Ethanol production of 4 billion gallons this year represents approximately 3% of the nation’s motor fuel demand. Using the Department of Energy’s projected growth in gasoline demand, 5 billion gallons of ethanol in 2012 would represent only about 3% of domestic motor fuel supplies. Thus, a 5-billion gallon RFS represents no new marketplace penetration for renewable fuels."

Dinneen continues: "On the other hand, establishing an 8 billion gallon RFS would have meaningful impacts on the U.S. economy and energy security. The ethanol industry has proven it can play a large role in addressing the economic and energy needs of this country. Enacting an 8 billion gallon RFS will unlock this potential."