Biofuels industry celebrates 10th anniversary of EISA

By Erin Voegele | December 19, 2017

Dec. 19 marks the 10th anniversary of former President George W. Bush signing the Energy Independence and Security Act of 2007 into law, establishing the current version of the Renewable Fuel Standard.

The RFS program was first created by the Energy Policy Act of 2005, which was signed into law by Bush on Aug. 8, 2005. The original RFS program, often referred to as RFS1, required 4 billion gallons of ethanol to be blended into the U.S. fuel supply in 2006, increasing to 6.1 billion gallons in 2009 and 7.5 billion gallons by 2012. Two years after its original establishment, the RFS program was updated and expanded by EISA, and now requires 36 billion gallons of renewable fuels to be blended into the U.S. fuel supply by 2022. The updated program, sometimes referred to as the RFS2, created nested volume requirements for cellulosic biofuels, advanced biofuels, biomass-based diesel and conventional biofuel. The U.S. EPA issued a final rule implementing the updates to the RFS program in March 2010.

Data published by the Renewable Fuels Association illustrates the significant growth in ethanol production that has been achieved since EISA was signed into law. In 2007, the U.S. produced approximately 6.52 billion gallons of ethanol. By 2016, that volume had risen to 15.33 billion gallons.

Production of other biofuels has grown significantly as well. Renewable identification number (RIN) data published by the EPA shows that a net total of 7.12 billion RINs were generated under the RFS program in 2010. By 2016, the net volume of generated RINs had increased to 19.45 billion.

To mark the 10th anniversary of EISA, the U.S. biofuels industry is celebrating accomplishments made over the past decade and looking forward to what the next 10 years might hold.


The past 10 years

Paul Winters, director of communications at the Biotechnology Innovation Organization, stressed that EISA included more than a simple expansion of the RFS. The legislation also contained loan guarantee programs and other support programs for biotechnology and biorefineries, he said. “The cycle of technology development that started with EISA has paid off in many ways,” he continued. “The greatest achievement has been the rapid commercialization and deployment of technology throughout the value chain to improve the efficiency of biofuel production and biorefining. Crop yields—particularly corn—continue to improve through technology. New bioenergy crops and seeds have been developed and brought to market. Biofuel production is increasingly efficient—yielding more fuel from each bushel and acre of crop—with new enzyme and process technology.”

“The rapid pace of biotechnology research and development over the past decade have brought new renewable chemicals and biobased products to the market, as well,” Winters added. “Companies are looking beyond annual crops to other sources of carbon—industrial waste streams or methane.”

Brian Jennings, CEO of the American Coalition for Ethanol, noted that EISA represented revolutionary change to U.S. policy. “Most legislation enacted by Congress just tinkers around the edges of public policy—something those of us who’ve worked on the Hill refer to as evolutionary policy change,” he said. “The RFS was unique and more consequential. The RFS has spurred revolutionary changes across entire sectors of the economy; substantially lower fuel prices for consumers, many more choices at the pump, dramatically greater energy security for the U.S., profitable value-added markets for farmers, high-wage jobs and other economic benefits in rural communities, etc.”

While Jennings said it is impossibly hard to single out one achievement the biofuels industry has made since EISA was signed as the most important, he noted that market share and innovation represent two major achievements.

Ethanol’s share of the gasoline market has grown substantially, he said, from less than 5 percent of the overall gasoline market to more than 10 percent today. “That was by design,” he said. “The RFS was enacted to disrupt oil’s status-quo grip on the marketplace and that’s precisely why oil companies continue to fight for repeal of the RFS. The ethanol industry also dramatically innovated thanks to the RFS. The RFS was a catalyst for technology innovation in our sector resulting in less energy and water to produce ethanol, a smaller carbon footprint, and overall a much more efficient industry. Ethanol’s contribution to reducing harmful GHG emissions is dramatically better than it was 10 years ago. The air is cleaner. Consumers have more low cost choices at the pump. Farmers and rural communities are better off. Our dependence on foreign oil is down. Farmers and ethanol are now part of the solution to reducing harmful carbon emissions.”

Emily Skor, CEO of Growth Energy, said it’s easy to forget what a watershed moment the signing of EISA was, noting that the RFS program has altered the trajectory of U.S. energy policy and sent our country in a new direction focused on regaining our energy security and encouraging the further development of renewable fuel resources. “When we look at America’s energy landscape today, the impact of this visionary, audacious effort to inject change into what had been a monopolistic system is clearly evident,” she added. “The vital and increasing role of biofuels in America’s fuel supply are yielding real-world results that touch people’s lives every day. Our air is cleaner. Our reliance on foreign oil is reduced. Farmers in this country’s heartland are hard at work ensuring that we have the resources to produce more biofuel that powers this country forward.”

“The homegrown companies that founded America’s biofuel industry have also destroyed the myths designed to hold back innovation and big-thinking,” Skor said. “Since the RFS was enacted we’ve completely torn down the so-called 10 percent blend wall and shown that high biofuel blends improve engine performance and our environment. In fact, Americans have driven over 2 billion worry-free miles on E15 alone. And, according to the USDA, ethanol reduces greenhouse gas emissions by 43 percent compared to conventional gasoline.”

When considering achievements made by the RFS program, Brooke Coleman, director of the Advanced Biofuels Business Council, noted it’s important not to forget the role ethanol played in replacing MTBE. “Often lost in the public discourse about the RFS is the fact that the ethanol industry ramped up and answered the call to replace the toxic drinking water contaminant MTBE,” he said. “Never mind that the industry now displaces the foreign oil equivalent of Saudi Arabia. Never mind that the industry has improved its carbon footprint year over year while the oil industry gets worse and worse. We’re talking about displacing one of the most problematic gasoline additives in history in MTBE without a hitch.”

The RFA has also highlighted several achievements the ethanol industry has made over the past 10 years, due primarily due to the RFS. The number of operational ethanol plants in the U.S. has nearly doubled, growing from 110 in 2007 to 211 in 2017. U.S. ethanol industry jobs also increased significantly, growing from 238,571 in 2007 to 339,179 in 2017. The value of the industry output increased 74 percent over the same timeframe, reaching $31 billion this year. The production of advanced and cellulosic biofuels has increased 469 percent over the past decade, reaching approximately 2.79 billion gallons in 2017.

The RFA also noted U.S. corn production has increased 12 percent since 2007, reaching 14.6 billion bushels this year, while corn acres planted fell 3 percent over the same time period, falling 90.4 million acres this year. Average corn yields increased 16 percent over the past decade, reaching 175.4 bushels per acre in 2017.

In addition, the RFA said the number of retail stations offering flex fuels increased 238 percent from 1,208 in 2007 to 4,077 in 2017. Over the same time period, the number of flex fuel vehicles on the road increased 266 percent, reaching 24.5 million this year.

The RFA’s analysis also shows greenhouse gas (GHG) emissions avoided from using ethanol increased 291 percent from 12.8 million tons CO2 equivalent (CO2e) in 2007 to 49.6 million tons CO2e in 2017.

“By any measure, RFS2 has been a huge success, bringing about greater consumer choice while helping to make the air cleaner, stimulate economic activity and enhance energy security,” said CEO Bob Dinneen, president and CEO of the RFA. “As this analysis shows, consumers have greatly benefitted from this vital program. These benefits have rippled throughout our economy and we look forward to even greater success of the RFS for years to come.”


Moving into the future

Those in the biofuels industry are also looking forward to the future, and what the next 10 years of the RFS might look like.

“What happens a decade from now depends on whether supportive policies remain stable and policy makers maintain the commitment to the RFS,” Winters said. “The industry needs to continue to push regulators to open the market as far as possible for advanced and cellulosic biofuel producers. Companies continue to make progress in technology development. But investment in commercialization can be easily derailed by policy instability. A decade from now, we don’t want this technology left sitting on a shelf.”

Winters also noted the increasing importance of biobased chemicals in the biorefining industry. “Renewable chemicals are rapidly becoming cost-competitive and attractive alternatives to petroleum for consumer product makers,” he said. “EISA supported their development, and the RFS sped progress in technology commercialization. Renewable chemicals have been fighting for equal recognition and support in other policy areas, particularly tax credits. They deserve that support, because they are needed to make biorefineries profitable through product diversification.”

David Cox, director of operations and co-founder of the Coalition for Renewable Natural Gas, noted the growing importance of biogas-based fuels under the RFS. "The EISA has helped grow and diversify the United States’ fuels portfolio,” he said. “Most recently, EISA has brought America’s most promising cellulosic biofuels, renewable-CNG and renewable-LNG, to commercial scale, ensuring that medium- and heavy-duty trucks and busses have a domestic, ultra-low carbon fuel option to move passengers and freight across our nation’s highways and through our communities. Ten years from now renewable natural gas will be known as the great success story of the RFS."

Jennings predicts that in 10 years the biofuels industry will be stronger and more important to the overall economic success of America that it is today. He also said he expects plants to produce a greater variety of products and coproducts as diversity and innovation continue to drive efficiencies.

Most importantly, Jennings said that he has every confidence that 10 years from now the biofuel industry’s market share will grow from 10 percent of gasoline demand to 20 to 30 percent. He said he bases that forecast on a couple of realities, including the prediction that overall fuel use will decline from 2017 levels due to fuel economy standards and technologies like electric vehicles. He also said he expects demand for low carbon fuel will rise as the U.S. comes to grips with the fact that we need to do more to reduce CO2 emissions from the transportation sector. “The lowest-cost way to reduce CO2 from vehicles is through low-carbon, high-octane fuels like ethanol,” Jennings said. “Automakers are already producing engines that require something akin to premium gasoline to achieve optimal efficiency. The problem is that premium fuel is cost-prohibitive. Ethanol is not only affordable, it also delivers meaningful GHG reductions. In 10 years ethanol enable consumers to fill up on low cost, low carbon, 100 RON fuel at the pump.”

Jennings also noted that implementation of the RFS is—by design—supposed to transition after 2022. “Until that time, Congress specified volume requirements that EPA must use to issue annual renewable volume obligations,” he said. “After 2022, the law requires EPA to coordinate with the Departments of Energy and Agriculture to set volumes based on a variety of factors such as an analysis of the impact of renewable fuel on air quality, climate change, energy security, job creation, and commodity prices to name a few.  Volumes for advanced biofuel can be no less in percentage terms than the 2022 volume.  It could be that EPA chooses to issue multi-year volumes as opposed to annual volumes.”

Skor said breakthroughs in advanced cellulosic technologies have the industry poised to, once again, change the game, improve efficiencies, and expand how earth-friendlier biofuels are produced. “One decade ago, we set out together on a journey to make our country stronger and more responsible,” she said. “On this keystone anniversary, our industry remains passionate about what the next 10 years holds. We are ready to meet the future and with the steadfast commitment of our champions in Congress and the support of the administration, low-cost, low-carbon renewable fuels will continue to move America forward.”

Coleman stressed that the RFS will continue beyond 2022. “While the prescribed volumes end in 2022, Congress gives EPA—in collaboration with USDA, DOE and others—the charge to keep implementing the law until we hit 36 billion gallons per year,” he said. “With close to 20 of 36 billion gallons already achieved, we will be approaching the full vision of the law notwithstanding the day-to-day smoke and mirrors coming from oil enthusiasts.

“The RFS is the most successful renewable energy policy ever enacted,” Coleman added. “It is controversial because it is changing the behavior of the most powerful, richest industry in the world. We will have to fight for every gallon, but that’s the way it goes when you wake up in the morning committed to reducing our dependence on oil.”