Renewable Fuels Standard (RFS)

As part of the comprehensive Energy Policy Act of 2005 that was signed into law Aug. 8, 2005, the Renewable Fuels Standard (RFS) helps define the role that renewable fuels such as ethanol and biodiesel will play in America’s quest to improve homeland security through increasing our use of renewable, domestically produced transportation fuels—and improve our environment by reducing toxic exhaust emissions.

The RFS provides stable demand for the use of renewable fuels such as ethanol while providing refiners with the flexibility to blend ethanol more efficiently in areas of the country where it makes the most sense economically and environmentally. The measure sets the minimum annual level of renewable fuel blended into the nation’s fuel supply at 7.5 billion gallons per year by 2012. The legislation guarantees a robust future market for corn (estimated at about 2.6 billion bushels by 2012) and allows for continued opportunities for farmer investment in new ethanol plants.

The RFS schedule requires 4 billion gallons of renewable fuels to be blended into the national gasoline supply in 2006, with incremental increases each successive year.

An RFS will also reduce the cost of the farm bill by slightly raising the price of corn, creating more value-added opportunities for farmers and strengthening rural economies.