Fueling The Conversation, Week of September 22nd, 2025
In the halls of Congress, the Renewable Fuel Standard (RFS) has become a Rorschach test for Republican energy policy. The Senate earlier this month offered a stark example. Senator Mike Lee (R-UT), chair of the Senate Energy and Natural Resources Committee, introduced the Protect Consumers from Reallocation Costs Act, a bill aimed at preventing the Environmental Protection Agency (EPA) from redistributing the burdens of this outdated mandate. Just two days later, Sen. Shelley Moore Capito (R-WV), chair of the Senate Environment and Public Works Committee, presided over a hearing on S. 881, the Renewable Fuel for Ocean-going Vessels Act, which would balloon the RFS into international shipping. One senator is fighting to rein in a flawed program; the other is looking for more avenues for corn to make its way into our fuels. This divide isn’t just procedural; it’s a symptom of how the RFS, born in a bygone era of ending foreign oil dependence, has morphed into a cronyist cash cow that harms consumers and undermines energy security.
The RFS was a Republican creation. Enacted in 2005, President George W. Bush claimed that boosting biofuels would wean us off foreign oil. In 2007, the Democrats in Congress joined the party by passing the Energy Independence and Security Act, which supercharged the RFS with ambitious volume mandates, including pie-in-the-sky targets for cellulosic biofuel. Fast-forward two decades: U.S. oil production has surged 149% since 2005, turning us from a net importer (with OPEC supplying nearly half our crude at peak) into a net exporter since 2020. Net imports now hover around zero, and much of what we do bring in — mostly from friendly neighbors like Canada and Mexico — is heavy crude that the United States doesn’t produce enough of to meet the needs of the Midwest and Gulf of America refineries that were purpose-built to process heavier crude slates. However, those Gulf Coast refineries have enabled the United States to become a major exporter of refined products, and by importing heavy Canadian and Mexican crude, the U.S. is now able to export about four million barrels per day of lighter, higher-value American crude – providing a significant boost to overall U.S. trade balances. In other words, the national security crisis that birthed the RFS was solved not by ethanol pumps but by American shale producers and a healthy trade balance with our neighbors.
Yet even President Trump’s EPA can’t seem to shake this bad habit. In recent proposed rules, the agency has ratcheted up volume mandates without a whisper of reassessment, ignoring how biofuels now displace domestic oil rather than foreign crude. With mandates outpacing U.S. production, imports fill the gap, and every barrel of imported biofuel bumps out homegrown petroleum. The latest rulemaking even toys with devaluing credits for those imports, which sounds tough on trade but backfires spectacularly. By slashing the compliance value of foreign biofuels, the EPA ensures even more imports are needed to hit targets, recreating the very dependence the RFS was supposed to cure. As the agency itself half-admits, domestic supply can’t keep up; instead of dialing back mandates, it doubles down, turning a security tool into a self-inflicted wound.
This blindness extends to the RFS’s most embarrassing flop: cellulosic ethanol. For over a decade, the EPA waived mandated volumes because commercial production has been a mirage, despite billions in subsidies. Congress’s 2007 optimism hasn’t aged well; reality demands zeroing out this category under the statute’s own factors for “expected annual rate of future commercial production.” Instead, past rules stretched definitions to absurdity, shoehorning liquefied natural gas (LNG) and compressed natural gas (CNG) into “cellulosic” biofuels, and even flirting with deeming electricity as such.
Additionally, there’s zero statutory support for the eRINs (electric Renewable Identification Numbers) push; it’s simply a transparent bid to launder RFS subsidies into electric vehicles (EVs). The RFS covers fuels that “replace or reduce the quantity of fossil fuel present in a transportation fuel,” not grid electrons that are inefficiently stored in batteries. Congress explicitly sidelined EVs in the 2007 law, tasking the EPA with a study, not a giveaway.
These aren’t abstract gripes; they hit wallets hard. Throughout the years, the RFS has acted like a hidden tax, jacking up gasoline and diesel prices by about $0.10 per gallon (and spiking higher in 2021). That regressive hit falls heaviest on working families, subsidizing a narrow biofuel elite at the pump. Small refineries get hit the worst: Congress built in exemptions for economic hardship, yet the EPA has dangled over 200 backlogged applications from 2016 onward, only to approve most, then float “reallocating” those waived volumes onto bigger players. No law backs this; it’s a lobbyist love letter. Enter Senator Lee’s bill: it slams the door on reallocation, affirming waivers as true relief, not a shell game. This is mandate-skeptical conservatism in action, protecting consumers from Washington’s nonsense and overreach.
Contrast that with S. 881, which would drag the RFS into shipping vessels, mandating biofuel blends for global shipping. Republicans swept 2024 on ditching Biden-era mandates, EV quotas, IRA subsidies, and they’ve delivered rollbacks galore. Why cling to this relic? The RFS’s “energy security” fig leaf is threadbare; it now erodes security by sidelining domestic oil for foreign feedstocks. As the EPA’s own analyses hint, projected global ethanol gluts won’t fix that; they’ll just import more problems.
Senate Republicans have a choice: champion the perspective of American families who see the RFS for what it is, a special-interest boondoggle outliving its welcome, or join those peddling expansions that enrich insiders while everyday Americans foot the bill. Senator Lee’s stand is a blueprint for correcting misguided policy. Reassess the program under its statutory factors, slash mandates to match reality, and let markets, not mandates, drive energy innovation. Anything less betrays the energy independence we’ve worked so hard to win.
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Fueling the Conversation, a weekly column by IER President Tom Pyle, offers a principled take on energy events. Energy underpins all aspects of modern life, so policies that artificially limit production hurt everyday people paying to heat their homes and drive to work. “Green” groups push these policies for ideological reasons, but this column uses economic logic and hard facts to advocate for energy freedom.
