The future of renewable fuels policy
The CHS Government Affairs team amplifies the voice of our owners so the viewpoint of farmers, ranchers, cooperatives and rural communities is heard.
“Climate change is a pillar of the Biden administration. It’s a massive priority,” says Dan Mauer, Washington representative for CHS. “That can mean a push toward more reliance on renewable fuels, but it could also result in a push toward electric vehicles (EVs), which could disrupt fuel supply and therefore ethanol supply.”
“We are going to continue to rely on fuel, but at what level?” says Mauer. “That creates some uncertainty.”
Electric vehicle adoption won’t happen overnight, he adds. “We’re watching EV adoption closely, but there are infrastructure and cost considerations. We may see things like the federal fleet moving to electric or even more tax credits for electric vehicles.”
EV infrastructure and reliance on already strapped electric grids will prove to be a challenge, says Mauer. “For example, the California government has said combustible engines won’t be sold in the state after 2035. California has rolling electric outages as it is. Where will the power for all these vehicles come from?”
Renewable Fuel Standard
The Renewable Fuel Standard (RFS) sets guidelines for how much ethanol and biodiesel refineries must blend with fuel. These blending mandates are called renewable volume obligations (RVOs).
Original RFS guidelines expire in 2022. “If Congress doesn’t replace the law, the Environmental Protection Agency with the Department of Energy can set blending mandates,” says Mauer. “We expect the Biden administration to set high RVOs post-2022, which could be good for ethanol markets.”
While greater E15 adoption could bring more ethanol plants online, there are challenges, says Mauer. “Regulatory and infrastructure issues may limit E15 accessibility.”
To help increase renewable fuels use, the USDA Higher Blends Infrastructure Incentive Program (HBIIP) provides grants to build biofuels infrastructure, such as helping a convenience store retrofit an underground storage tank for E15 storage.
In 2020, HBIIP awarded $22 million to 40 recipients in 14 states, mostly in the Corn Belt. “The program got bipartisan support and funding went quickly,” says Mauer, who says similar funding may be approved through appropriations bills that set federal budgets.
Mauer says another renewable fuels funding opportunity is the nearly $2.25 trillion infrastructure plan put forth by the Biden administration in March 2021. While the plan has little earmarked for biofuels as originally written, Mauer expects opportunities to change that.
“CHS is advocating for funding for programs like HBIIP and I’m cautiously optimistic that there will be pressure on the Biden administration to continue to fund programs that build renewable fuels infrastructure,” says Mauer.
Whether it’s through government mandates or infrastructure funding, “There is a lot of opportunity for ethanol and renewable fuels when it comes to policy,” says Mauer.
“Decreasing emissions through greater use of E15 and other blended fuels will go a long way to help the Biden administration achieve its climate-related goals.”
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