The Congressional Budget Office (CBO) this week issued a report titled, “The Renewable Fuel Standard: issues for 2014 and Beyond.” The report attempted to examine the economic impacts of several Renewable Fuel Standard (RFS) scenarios. There were several positive conclusions in the report, including the fact that biofuels, corn ethanol specifically, do not have a significant impact on food prices, since the crops account for only a small fraction of U.S. spending on food. Rightfully so, the report does not cite any issues with biodiesel in the section on “Challenges in Meeting the Renewable Fuel Requirements of EISA.”  The Biomass-based Diesel portion of the RFS has been met or exceeded each and every year with no significant adverse impact to fuel or feed prices.

Unfortunately, one aspect of the report provides a distorted view of potential price impacts of biodiesel, and this has been highlighted by some RFS opponents and news outlets. The CBO modeled a price-impact scenario in the Advanced Biofuel pool that is unrealistic, impractical and not consistent how EPA has implemented the RFS in previous years. This scenario results in CBO suggesting that diesel prices could increase by 30-51 cents per gallon or 9-14 percent by 2017.

CBO used a scenario in which EPA doesn't reduce the overall Advanced Biofuel targets even if the production of significant volumes of cellulosic biofuels called for under the statute do not come to fruition, which results in the calculation of the price impacts of 9 billion gallons of biodiesel to fill all of the Advanced Biofuels requirements instead.  In fact, EPA has utilized its authority to waive the unmet cellulosic portion of the RFS and the EPA and the biodiesel industry has called for reasonable and realistic volumes of biodiesel.  There is no evidence to suggest that EPA would not continue to implement the RFS this way and there is no expectation that 9 billion gallons of biodiesel would be demanded to fill the entire volumes of Advanced Biofuel prescribed by the EISA statute enacted in 2007.

The soybean and biodiesel industry has called for modest, steady growth in the biodiesel section of the program and the volumes we have supported have been met or exceeded each year of the RFS with no significant adverse impact to fuel or feed prices.

In addition, the CBO report does not address the many benefits of the RFS.  According to EPA’s own figures, biodiesel reduces greenhouse gas emissions by 57 percent to 86 percent compared with petroleum diesel. The RFS is working as intended to diversify domestic fuel refining and reduce emissions while creating jobs and boosting the rural economy.