The Renewable Fuel Standard: “Set Up For Fraud”

Townhall discusses the Renewable Fuel Standard with Marlo Lewis. 

In a July 25 report on the RFS, Marlo Lewis, Jr., a senior fellow at the Competitive Enterprise Institute, explains: “Each gallon of biofuel produced is assigned a unique 38-digit Renewable Identification Number (RIN). When a refiner sells a gallon of biofuel in the motor fuel market, it earns a RIN credit. A refiner that does not meet its annual obligation by actually blending and selling biofuel can comply by purchasing surplus RIN credits from another refiner that exceeded its obligation.”

Because the law requires ever-increasing quantities of biofuel be produced—even beyond what consumers want or most vehicles can handle—RINs offer refiners a way to presumably meet the mandates while providing the market with what it wants. A graphic in the Bloomberg report explains: “Biodiesel RINs tend to cost more than ethanol RINs or other types because they are scarcer and can be used to satisfy multiple requirements under the Renewable Fuel Standard.”

The biofuel fraud is just one prong in the growing push for RFS reform. The economic and technical realities of the “blend wall,” as detailed in Lewis’ report, is another. On July 27, Bloomberg chronicled the history of the unlikely third prong: big green groups’ biofuel blunder. They’ve now turned against ethanol due to the agricultural runoff in waterways and conversion of prairies to cropland. Environmentalists, who once championed biofuels, are now seen as a factor in “improving the odds that lawmakers might seek changes to the program next year.”

Read the full article at Townhall.