It is time for the U.S. government to get out of the business of picking technological winners and losers. A glaring example is the outdated federal mandate known as the Renewable Fuel Standard (RFS) – last modified in 2007 – it has restrained the potential growth of the alternative fuels market. While well meaning, the RFS requirement that only renewable feedstocks like corn be used to produce ethanol is spiking food and feed prices and violating the administration’s widely-supported “All-of-the-Above” approach. In light of the economic challenges facing the U.S., we should be using all of our energy resources and ingenuity to expand the market, create jobs and reduce our dependence on petroleum imports.
The need for change has become apparent with the U.S. drought devastating corn supplies and driving up prices. The reality is, even before the drought, corn prices have doubled as government mandates have required the use of increasing amounts of ethanol for fuel blending. Today, approximately 40 percent of the U.S. corn crop is used for fuel; and stretched to the limit by failing crops, increased competition and soaring feed costs, farmers are squeezed by the rising demand of corn for fuel.
When Congress picked corn as the winner in 2007, they did not account for the advances in technology that would occur. The company I work for has developed TCX® Technology that produces fuel ethanol from natural gas. This technology enables cost effective production of fuel-grade ethanol using abundant U.S. resources. It has the added benefit of being significantly cost advantaged versus corn-based ethanol and can be produced at a mass scale. No subsidies or tax credits are needed, and with the shale gas revolution, the supply of our key raw material has increased exponentially. It is also drought-proof.
New technologies would bring much-needed relief to high corn prices and inject fresh growth and innovation into the alternative fuels industry. The RFS program was designed for a different time and lacks the flexibility to account for innovation. This shortsighted program stifles competition and gives the advantage to a small sliver of industries. The RFS is inhibiting the opportunity to grow our domestic energy economy while other countries, like China and Indonesia, are moving ahead rapidly in the alternative fuels race.
But the push for change is growing. Earlier this year, Representative Pete Olson (R-TX) introduced the bi-partisan Domestic Alternative Fuels Act of 2012, which would modify the RFS to allow for a broader range of domestic alternative fuel sources. This means ethanol produced from readily available and inexpensive hydrocarbons could compete in the U.S. transportation fuel market. It also opens the door for more innovation.
This is a perfect opportunity for the US Congress to grow the alternative fuels market, create new jobs and further reduce our reliance on foreign oil – a win for all involved and ever more critical in today’s economic climate. Let’s put smart innovations to work for the American economy.
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