Renewable Fuels Standard

Tesoro believes that the Renewable Fuels Standard (RFS) should be repealed. Since its inception, Tesoro has fully complied with the RFS. Nonetheless, Tesoro believes that the RFS, designed to achieve significant greenhouse gas reductions, is a flawed government intervention into the fuel market.

Objective observers seem to coalesce around the conclusions that the current RFS mandates are:

(1) Based on incorrect market assumptions regarding domestic transportation fuel demand and technological breakthroughs relative to advanced biofuel production;

(2) unlikely to be met;

(3) causing unintended consequences in other market segments; and

(4) will not result in any discernible net reduction of greenhouse gas emissions.

In its most recent study of the RFS, the National Academy of Sciences concluded not only that it was unlikely the U.S. could meet the RFS-mandated levels of renewable fuel by 2022 but that the RFS “may be an ineffective policy for reducing global greenhouse gas emissions.” The US Department of Energy agreed, stating on June 26, 2013, that “the RFS is not predicted to come close to achievement of the legislated target that calls for 36 billion gallons of renewable motor fuels use by 2022.”

Pending outright repeal, Tesoro believes that Congress and the Administration should undertake a comprehensive review of the RFS. This would include an examination of the economic assumptions underpinning its creation, and a comprehensive and transparent cost-benefit analysis to determine if the program can and should be continued.

The cellulosic ethanol mandate is just one example of flaws with the RFS. USEPA mandates that refiners must purchase millions of gallons of cellulosic ethanol; a fuel that is not produced in commercial quantities. Regardless, refiners are then financially penalized for not purchasing the unavailable cellulosic ethanol. Click here to read more about the Cellulosic Ethanol Mandate in the RFS.

In spite of opposition by car manufacturers, small engine manufacturers, the American Automobile Association, and fuel refiners, USEPA has unilaterally adopted regulations to enable a 50 percent increase in the ethanol content of America’s gasoline. New E15 regulations come with a USEPA warning to car owners, owners of other gas-powered small engines, and motorcyclists. To read more about E15 please click here.