Renewable Fuel Standard (RFS)

The foundation of America's renewable energy policy

The Renewable Fuel Standard (RFS) has been the single most successful clean fuels policy in the United States, making fuel more affordable for millions of Americans, helping to generate jobs, reviving rural America, reducing oil imports, and protecting our environment by reducing air pollution and greenhouse gas emissions. In fact, a 2019 study found that consumers save 22 cents on every gallon of gas thanks to the Renewable Fuel Standard. That’s a savings of nearly $5 every time you fill up, or $250 per American family every year.

More than a decade after the RFS2 was adopted, enormous progress has been made toward achieving the objectives of this landmark policy. It’s clear that renewable fuels like ethanol are a win for all Americans. It’s more affordable than traditional gasoline, it reduces America’s dependence on petroleum and harmful vehicle emissions, and ethanol production supports nearly 300,000 American jobs. The value of agricultural products and farm income have been buoyed. And, communities across the country have benefited from job creation, increased tax revenue, and heightened household income that stem from the construction and operation of a biorefinery.

Renewable fuels like ethanol have a forty-year track record of making fuel more affordable and vehicles more efficient for millions of Americans. To build on this record of success, the renewable fuels industry needs consistent policy in place for continued growth and innovation. Attempts by the oil industry to repeal or change the RFS would undermine the progress we have made. It’s critical the Environmental Protection Agency (EPA) follow the intent of Congress and meet the 15 billion gallon Renewable Volume Obligations set forth in the statute.

Small Refiner Exemptions

The RFS was created to preserve our environment, protect America’s energy independence, and give Americans more affordable options at the pump.

Big oil companies are working to undermine the RFS, which is hurting family farms, ethanol producers, and our environment.  They are doing so by exploiting a loophole that exempts them from their renewable fuel obligations.

Here’s how it works.

Oil refineries producing transportation fuel must demonstrate each year that they have blended certain volumes of renewable fuel into gasoline or diesel fuel or acquired credits from others called “RINs” representing all or part of those volume obligations.  The RFS allows certain “small” refineries – those with a throughput of less than 75,000 barrels per day – to petition the EPA for a temporary extension of an exemption from the renewable fuel volume requirements for a given year. To qualify for the exemption from the law, the refinery must show that compliance would impose a “disproportionate economic hardship” on them.  The EPA is required to consult with the Department of Energy to determine whether to grant an exemption.

small_refineries_exempt

To date, the EPA has yet to provide the public with any information regarding how it assesses small refinery exemption petitions and it has resisted release of almost all information regarding recent exemptions that have been granted, including: (1) the fact that it has granted an exemption; (2) the name of the exempted refinery; (3) the volume of renewable fuel exempted; (4) the years covered by the exemptions; (5) the EPA’s analysis of whether the small refinery would be subject to disproportionate economic harm if it had to comply with the RFS.

The Renewable Fuels Association, and others, has petitioned the EPA to change its regulations to account for lost volumes of renewable fuel resulting from the unprecedented number of retroactive small refinery exemptions from RFS obligations granted by the EPA.

We’ve asked the EPA to change existing regulations that determine the annual percentage of renewable fuels blended into America’s transportation fuel. American consumers and ethanol producers deserve a “true up” so that any small refinery exemptions granted after the renewable volume obligations (RVOs) for that year have been finalized are not lost.

What is a RIN credit? 

A Renewable Identification Credit (RIN) is a numbered credit assigned to each gallon of renewable fuel for the purpose of tracking its production and use under the RFS.  Petroleum refiners and importers turn in RINs to the EPA to demonstrate that they fulfilled their annual renewable fuel blending obligations. Refiners and importers who do not wish to blend renewable fuels may instead purchase RINs from other parties who blended more than their obligated volume.  

The system was designed so that as RFS volume requirements escalate, RIN supplies tighten, and RIN prices rise.  This creates greater incentive to blend more renewable fuels, helping to lower vehicle emissions while making gas more affordable. 

What Happens to the RFS After 2022? 

Contrary to popular myth, the RFS does not “phase out” or “sunset” at the end of 2022. When Congress passed the Energy Independence and Security Act of 2007 (EISA), it specified RFS volume requirements through the year 2022 for total renewable fuels, advanced biofuels, cellulosic biofuels, and biomass-based diesel. For years after 2022, the law clearly states that required volumes of each renewable fuel shall be determined by the EPA Administrator, in coordination with the Secretary of Energy and the Secretary of Agriculture. In other words, the law requires the EPA to set RFS volumes for 2023 and beyond, according to certain criteria defined in the statute.