Study of Economic and Environmental Impacts of Renewable Fuel Standard Released

Can the Renewable Fuel Standard goals be achieved? Will advanced biofuels reduce greenhouse gas emissions and other environmental impacts? What will it cost? These are the questions that the National Research Council (NRC) Committee on Economic and Environmental Impacts of Increasing Biofuels Production sought to answer in its just released report.

October 4, the NRC released the Committee’s report “Renewable Fuel Standard: Potential Economic and Environmental Effects of U.S. Biofuel Policy.” The Committee found that “the Renewable Fuel Standard (RFS), which mandates the production of 35 billion gallons of ethanol-equivalent biofuels and 1 billion gallons of biomass-based diesel by 2022, is not likely to be met”, and that even if the RFS volume goal was achieved, “it may not be effective in addressing global greenhouse gas emissions because the extent of emissions reductions depends to a great degree on how the biofuels are produced and what land-use or land-cover changes occur in the process.”

Curiously, while the economic costs of pursuing the RFS mandate were fully enumerated in the report, relatively few of the economic benefits were emphasized – such as the impact that domestic biofuel production has had or will have on the economy and employment ( by one estimate , about 400,000 direct and indirect jobs and counting), or the impact that low-cost ethanol (by reducing demand for petroleum-based fuels) has had on the price of gasoline at the pump, or the impact the policy may have on reducing the trade deficit due to reduced petroleum imports.