Report Suggests Ways to Fix Renewable Fuel Standard

The future of the RFS remains in question. Though President-elect Donald Trump pledged support for the RFS during the primary campaign, the direction of his U.S. Environmental Protection Agency remains an open question.  Oil industry interests and others have called for RFS reform or repeal. According to the GAO, however, experts say there are ways to make the RFS work more effectively."For example, some experts told GAO that maintaining a consistent tax credit for biofuels, rather than allowing it to periodically lapse and be reinstated, could reduce uncertainty and encourage investment in advanced biofuels," the GAO said.In particular, the second-generation biofuel producer tax credit has been allowed to expire about every two years."These experts told us that investment in cellulosic biofuels could be encouraged, in part, by maintaining the second generation biofuel producer tax credit consistently, rather than allowing it to periodically lapse and be reinstated," GAO said.One expert, the GAO said, suggested three changes to the credit. One would be to make the credit more long-term up to 10 years. A second idea is to make the credit refundable to make sure biofuel producers receive the subsidy in early years when they are sustaining financial losses. Third would be to couple the producer tax credit with an investment tax credit to decrease capital costs and improve the financial incentives for building cellulosic biofuel plants.