As a result,  since 2010, EPA has used its waiver authority to deviate from the  statutory target volumes and has reduced the volume requirement for  cellulosic biofuel every year, citing inadequate domestic supply, among  other things (see fig.2). EPA’s responsibilities for the RFS also include determining companies’  compliance with the RFS. Limited Production of Advanced Biofuels Makes the RFS Unlikely to Meet Its Goals

It is unlikely that the goals of the RFS—to reduce greenhouse gas  emissions and expand the nation’s renewable fuels sector—will be met as  envisioned because there is limited production of advanced biofuels to be  blended into domestic transportation fuels and limited potential for  expanded production by 2022. For example, the cellulosic biofuel blended into transportation fuel in 2015  was less than 5 percent of the statutory target of 3 billion gallons. The shortfall of advanced biofuels is the result of high production costs,  despite years of federal and private research and development efforts. According to several experts we  interviewed, the investments and development required to make these  fuels more cost-effective, even in the longer run, are unlikely in the  current investment climate, in part because of the magnitude of  investment and the expected long time frames required to make  advanced biofuels cost-competitive with petroleum-based fuels. The RFS Has Relied on Corn-Starch Ethanol, Which in Higher Blends Is Incompatible with Existing Infrastructure and Offers Comparatively Small Greenhouse Gas Reductions

In the absence of advanced biofuels, most of the biofuel blended under  the RFS to date has been conventional corn-starch ethanol, which  achieves smaller greenhouse gas emission reductions than advanced  biofuels. This criticism focuses on whether the model accurately accounts  for all greenhouse gas emissions in the corn-starch ethanol production  process. Experts Suggested Multiple Federal Actions That Could Incrementally Encourage Investment in Advanced Biofuels and Increase Compatibility of Infrastructure with Higher Ethanol Blends

While advanced biofuels are not likely to be produced in sufficient  quantities to meet the statutory targets, experts identified actions that they  suggested could incrementally improve investment in advanced biofuels  and may lead to greater volumes of these fuels being produced and used  in the longer term. 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. Appendix I: Scope and Methodology

The objectives of this report were to provide information on (1) whether  the Renewable Fuel Standard (RFS) is expected to meet its goals, (2)  expert views on any federal actions that could improve the RFS  framework, and (3) policy alternatives experts suggested to better meet  the goals of the RFS in the future. Finally, this report drew from a companion report, GAO-17-108,  that examined federal research and development in advanced biofuels  and related issues.
Why GAO Did This Study

The RFS generally mandates that domestic transportation fuels be blended with increasing volumes of biofuels through 2022, with the goals of reducing greenhouse gas emissions and expanding the nation's renewable fuels sector while reducing reliance on imported oil. Annual targets for the volumes of biofuels to be blended are set by statute. EPA oversees the program and is responsible for adjusting the statutory targets through 2022 to reflect expected U.S. industry production levels, among other factors, and for setting biofuel volume targets after 2022. Biofuels included in the RFS are conventional (primarily corn-starch ethanol) as well as various advanced biofuels (including cellulosic ethanol and biomass-based diesel). Advanced biofuels emit fewer greenhouse gases than petroleum and corn-starch ethanol.
GAO was asked to review challenges to the RFS and their possible solutions. This report provides information on whether the RFS is expected to meet its goals, as well as expert views on any federal actions that could improve the RFS framework, among other things. GAO worked with the National Academy of Sciences to identify experts on issues related to the RFS. GAO interviewed these experts and analyzed their responses. This report also drew on published studies, and a companion report, GAO-17-108 , that examined federal research and development in advanced biofuels and related issues. EPA generally agreed with the report.

What GAO Found

It is unlikely that the goals of the Renewable Fuel Standard (RFS)—reduce greenhouse gas emissions and expand the nation's renewable fuels sector—will be met as envisioned because there is limited production of advanced biofuels to be blended into domestic transportation fuels and limited potential for expanded production by 2022. Advanced biofuels achieve greater greenhouse gas reductions than conventional (primarily corn-starch ethanol), while the latter accounts for most of the biofuel blended under the RFS. As a result, the RFS is unlikely to achieve the targeted level of greenhouse gas emissions reductions. For example, the cellulosic biofuel blended into the transportation fuel supply in 2015 was less than 5 percent of the statutory target of 3 billion gallons. In part as a result of low production, EPA has reduced the RFS targets for advanced biofuels through waivers in each of the last 4 years (see figure). According to experts GAO interviewed, the shortfall of advanced biofuels is the result of high production costs, and the investments in further research and development required to make these fuels more cost-competitive with petroleum-based fuels even in the longer run are unlikely in the current investment climate.
Experts cited multiple federal actions that they suggested could incrementally improve the investment climate for advanced biofuels. 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.