Energy Bill Touts 7.5 Billion Gallon RFS

Biofuels get big boost with energy bill conferees agreement to set a 7.5 billion-gallon Renewable Fuels Standard. Jacqui Fatka

Published on: Jul 26, 2005

The joint House-Senate conference committee considering comprehensive energy legislation early this morning agreed to a strong biofuels package that would double the use of ethanol and biodiesel by 2012. Creation of a 7.5 billion-gallon renewable fuels standard (RFS) spearheads several important provisions for biofuels.

The ethanol and biodiesel compromise is larger than the 5 billion gallons approved by the U.S. House of Representatives, but smaller than the 8 billion gallons called for by the Senate.

National Corn Growers Association Director of Public Policy Jon Doggett says the higher RFS shows that ethanol now has a proven track record. "When we said five years ago that we could produce 5 billion gallons of ethanol in seven years, many doubted that the industry could do that," he says. "Now we're producing over 4 billion gallons in less than four years. That got people's attention."

Renewable Fuels Association President Bob Dinneen says that, "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. A 5-billion gallon RFS represents no new marketplace penetration for renewable fuels."

Implementing this RFS will make the U.S. the leading producer and consumer of renewable fuels in the world, Dinneen adds.

Key provisions adopted by the conference committee:

  • Ensures renewable fuel use grows by establishing an RFS that starts at 4 billion gallons in 2006 and increases to 7.5 billion gallons in 2012;
  • Provides refiners flexibility by creating RFS credits that would have a lifespan of 12 months; and,
  • Protects consumers with waiver language that also does not undermine the marketplace certainty an RFS provides.

The gasoline additive MTBE is not banned by the bill, but also does not receive liability protection from defective product lawsuits. The reformulated gasoline (RFG) oxygenate standard is eliminated 270 days after date of enactment and RFG air quality performance standards are enhanced. In addition, the tax portion of the bill is expected to include provisions important to ethanol and biodiesel.

A plan to require utilities to generate at least 10% of their electricity from renewable resources by 2020 was rejected. The measure was repeatedly passed in the Senate.

Doggett said NCGA has stressed with negotiators the past several days that how you implement the RFS is every bit as important as what the level is set at. "There were things we've seen over the weekend that we needed to go back and review the language and make sure that what the staff wrote down is indeed what the legislators agreed to. We have found some things that needed to be changed," Doggett said without giving exact details.

Negotiators worked late into the evening Monday night. The amount of energy tax breaks and incentives are still unknown. Doggett says that part of the bill has been less transparent than the RFS level. He expects the spending level to be closer to $11 billion, higher than the $6.7 billion approved by the House and sought by the Bush Administration.

Doggett expects a final draft to be drawn on Wednesday, a vote on Thursday in the House and Friday in the Senate. If the votes go as planned, President Bush could get the legislation on his desk by August 1 as he asked several months ago.