The Renewable Fuel Standard (RFS) is a program that requires energy suppliers to replace or reduce the quantity of petroleum-based fuels with a specific volume of renewable fuels, including biofuel. According to a February 2023 National Restaurant Association press release, changes in the RFS program may affect the price and availability of vegetable oil for the food industry.
The Energy Policy Act (EPAct) established the RFS program in 2005, which amended the Clean Air Act. The four fuel types considered for participation in the program are biomass-based diesel, cellulosic and advanced biofuel, and total renewable fuel. Examples of renewable fuels that meet the EPA standards include ethanol made from sugar cane, cellulosic ethanol made from corn stover, and compressed natural gas produced from wastewater treatment centers.
According to the National Restaurant Association, the food and restaurant industry was affected in the past when increased production of biofuels impacted the supply chain, consumers, and restaurants. The purpose of the RFS is to reduce greenhouse gases in the environment. However, according to the National Restaurant Association, the RFS program continues to harm restaurants, consumers, and the restaurant industry supply chain. When the government established the RFS and diverted corn crops from the feed and food industries to renewables, the prices of corn crops increased significantly, as did market volatility.
More recently, soybean prices have spiked. As much as 40 percent of soybeans were used for biofuels in 2021 and 2022, which resulted in historically high soybean prices. International Energy Agency projects that production for vegetable oils used in biofuels will increase by 46 percent.
According to a June 2022 article in agricultural publication AgriNews, the US energy industry produces 3 billion gallons of biodiesel fuel each year. Feedstocks, including soybean oil, are some of the sources of biodiesel. Some industry experts expect this amount to increase because of the expansion of renewable diesel production and the RFS policy, which allows the EPA to set yearly guidelines for renewable fuel production.
While this is exciting news for the soybean industry, the expansion may negatively impact the restaurant industry because it will likely create a higher demand for vegetable products, which will bring higher costs for restaurant operators. The National Restaurant Association is particularly concerned about the RFS-proposed, multiyear biofuel volume guidelines that may pressure the restaurant industry. The proposed changes would increase biofuel volumes and demand between 2023 and 2025. According to a February 2023 National Restaurant Association press release, this demand could impact the availability of soybean oil and other vegetable oils. The National Restaurant Association anticipates that prices will increase as demand increases.
The restaurant industry is always vulnerable to food prices, in part because most restaurants operate on thin margins. Combined with the impact of inflation, the RFS-proposed changes may culminate in increased menu prices. The National Restaurant Association’s appeal also stated that this might be a chance for the EPA to offer relief to small businesses, food manufacturers, and consumers by reducing competition between those in the food industry chain and fuel producers.
Commenti