NACS to Congress: Evolve the Renewable Fuel Standard

ALEXANDRIA, Va. -- The Renewable Fuel Standard (RFS) is already outdated and must evolve to survive, NACS, the Association for Convenience & Fuel Retailing, wrote today in a statement to the U.S. Congress.

The RFS, enacted in 2007, requires increasing amounts of qualified renewable fuels to be integrated into the motor fuels supply, culminating at a minimum of 32 billion gallons in 2022. To reach that mandate, renewable fuels must comprise 28 percent of the overall gasoline market in 2022, nearly triple the rate achieved in 2012, according to NACS.

"The assumptions about the growth of the U.S. motor fuels market that informed the 2007 Congress have proven wrong and the program needs to evolve to reflect current market realities," said John Eichberger, NACS' vice president of government relations. "Six years ago, there was every indication that motor fuels demand would continue to increase. Instead, it has declined by 7 percent since 2007 and is projected to continue to decline, making it even harder to satisfy the requirements of the RFS."

Although E10, a fuel blend of 10 percent ethanol and 90 percent gasoline, is commonly sold throughout the country, E15 and E85 must become prominent alternative fuels, the trade group said. A consumer survey conducted by Penn, Schoen and Berland Associates LLC of 1,183 gas consumers, however, revealed that customers are unfamiliar with E15.

According to the survey, conducted from May 7-9, only 26 percent of fuel consumers said they were familiar with E15. Once the alternative fuel was described to consumers, 59 percent responded that they would purchase E15. Still, of that 59 percent, three in five said their primary vehicle was from model year 2000 or earlier, excluding them from purchasing E15 as per Environmental Protection Agency mandates.

"Consumer unfamiliarity with E15 significantly limits its retail availability because demand is insufficient," said Eichberger. "Worse, most consumers are wary of the product: 55 percent of those who said they will not purchase E15 said they are worried that it will damage their vehicles, and 45 percent are worried about decreased performance and fuel efficiency. Limited potential demand will not change until some negative perceptions about the fuel are addressed through a comprehensive education campaign."

The study also found that consumers are unfamiliar with E85, a blend of 85 percent ethanol and 15 percent gasoline that can only be used in flex-fuel vehicles. Just 29 percent of consumers said they were familiar with E85, while only 10 percent said they drive a flex-fuel vehicle.

In addition, 75 percent of fuel retailers surveyed said demand isn't sufficient enough for them to install E85 pumps.

In order to make the RFS effective, NACS concluded that Congress must do three things:

• The statutory increases in renewable fuel volumes sold each year must be revised to reflect the declining size of the overall market;
   
• Policymakers must take steps to make higher ethanol blends legal and attractive to sell; and
   
• A significant education campaign is needed to build consumer demand.

Alexandria, Va.-based NACS has 2,100 retail members and 1,600 supplier member companies.