In response to concerns about the nation’s dependence on imported oil, Congress enacted the RFS program as part of the Energy Policy Act of 2005. This initial RFS required that a minimum of 4 billion gallons of biofuels be used in 2006, rising to 7.5 billion gallons by 2012. Two years later, the Energy Independence and Security Act of 2007 (EISA) expanded the biofuel target volumes and extended the ramp-up through 2022 establishing overall target volumes for biofuels that increase from 9 billion gallons in 2008 to 36 billion gallons in 2022. The EISA volumes can be thought of in terms of two broad categories: conventional and advanced biofuels: Conventional biofuel: Biofuels from new facilities must achieve at least a 20-percent reduction in greenhouse gas emissions, relative to 2005 baseline petroleum-based fuels. The dominant biofuel produced to date is conventional corn-starch ethanol, although recently some conventional biodiesel has entered the fuel supply. Advanced biofuel: Biofuels, other than ethanol derived from corn starch must achieve at least a 50-percent reduction in life-cycle greenhouse gas emissions, as compared with 2005 baseline petroleum-based fuels. This is a catch-all category that may include a number of fuels, including fuels made from any qualified renewable feedstock that achieves at least a 50- percent reduction in lifecycle greenhouse gas emissions, such as ethanol derived from cellulose, sugar, or waste material. This category also includes the following: Biomass-based diesel: Advanced biomass-based diesel must have life-cycle greenhouse gas emissions at least 50 percent lower than traditional petroleum-based diesel fuels. Cellulosic biofuel: Advanced biofuel derived from any cellulose, hemicellulose, or lignin that is derived from renewable biomass must have life-cycle greenhouse gas emissions at least 60 percent lower than traditional petroleum-based fuels. This category of fuel may include cellulosic ethanol, renewable gasoline, cellulosic diesel, and renewable natural gas from landfills that can be used to generate electricity for electric vehicles or used in vehicles designed to run on liquefied or compressed natural gas. The RFS required the annual use of 4 billion gallons of overall biofuels in 2006, rising to 36 billion gallons in 2022, with at least 21 billion gallons from advanced biofuels, effectively capping the volume of biofuels (primarily conventional, or corn-starch, ethanol) that may be counted toward the overall 2022 target of 15 billion gallons. EPA administers the RFS in consultation with DOE and USDA. EPA’s responsibilities for implementing the RFS include setting annual volume requirements and, in doing so, using its waiver authority to reduce statutory volume targets, if warranted. As figure 1 shows, the structure of the volume targets allowed for blending of conventional corn-starch ethanol in the early years covered by the statute while providing lead time for the development and commercialization of advanced, and especially cellulosic, biofuels. However, these fuels have not been produced in sufficient quantities to meet statutory targets through 2016. 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). In December 2015—when EPA finalized the volume requirements for 2014, 2015, and 2016—the agency reduced the total renewable fuel requirement for those years. Effectively, this meant that EPA reduced the amount of conventional biofuels required under the program relative to statutory targets for those years. Similarly, in the volume requirement proposed in May 2016, EPA also proposed reducing the total renewable fuel requirement for 2017 compared with the target volumes in the statute: from 24 to 18.8 billion gallons (see fig.3). In both cases, EPA cited constraints in the fuel market’s ability to accommodate increasing volumes of ethanol. EPA’s use of this waiver authority has been controversial among some RFS stakeholders, and EPA’s 2015 requirement currently faces legal challenges from multiple parties. EPA’s responsibilities for the RFS also include determining companies’ compliance with the RFS. EPA regulates compliance with the RFS using a credit system. Companies in the United States that refine or import transportation fuel must submit credits—called renewable identification numbers (RIN)—to EPA. Companies with such an obligation are known as “obligated parties.” The number of RINs that an obligated party must submit to EPA is proportional to the volume of gasoline and diesel fuel that the obligated party produces or imports and depends on the total volume requirement EPA sets for the year in question. In accordance with EPA guidelines, a biofuel producer or importer assigns a unique RIN to a gallon of biofuel at the point of production or importation. When biofuels change ownership (e.g., are sold by a producer to a blender), the RINs generally transfer with the fuels. When a gallon of biofuel is blended or supplied for retail sale, the RIN is separated from the fuel and may be used for compliance or traded, sold, or held for use in the following year. Since biofuels supply and demand can vary over time and across regions, a market has developed for trading RINs. If a supplier has already met its required share and has supplied surplus biofuels for a particular biofuel category, it can sell the extra RINs to another entity or it can hold onto the RINs for future use. An obligated party that faces a RIN deficit can purchase RINs to meet its obligation. Since the establishment of the RFS, conventional corn-starch ethanol is the biofuel that has most often been blended with gasoline. After production, ethanol is blended into the gasoline either by the wholesale distributor or at the retail pump, with both requiring specialized tanks and pumping equipment. Retailers sell specific blends of gasoline and ethanol: E10 (up to 10 percent ethanol); E85 (51 to 85 percent ethanol); and, less typically, E15 (15 percent ethanol). E10 is the most widely used blend, representing the overwhelming majority of gasoline sales in the United States. The E85 blend is specifically used by flex fuel vehicles. Currently, there are relatively few of these automobiles in the United States, and E85 stations are located primarily in the Midwest. The sale of E15 blend is even less common than that of E85. For both E85 and E15, developing retail pump infrastructure has been a focus of USDA’s Biofuel Infrastructure Partnership which, beginning in 2015, has made $100 million available in matching grants in 21 states to install nearly 5,000 new retail pumps. In the years since the RFS was established, U.S. oil imports have decreased. Several factors contributed to the decrease in reliance on imported oil, including the use of E10 brought about by the RFS. However, other factors contributed more significantly to the decrease. According to an April 2015 DOE report, at the same time that U.S. oil production was growing, U.S. oil consumption, and particularly consumption of gasoline, was falling. A number of factors led to the decrease in consumption, including historic fuel economy standards for light and heavy vehicles in recent years. It is unlikely that the goals of the RFS 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. 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 compared with advanced biofuels. In addition, further reliance on ethanol to meet expanding RFS requirements is limited by incompatibility of ethanol blends above E10 with existing vehicle fleet and fueling infrastructure. 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. As we report in GAO-17-108, advanced biofuels are technologically well understood, but current production is far below the volume needed to meet the statutory targets for these fuels. For example, the cellulosic biofuel blended into transportation fuel in 2015 was less than 5 percent of the statutory target of 3 billion gallons. Given current production levels, most experts we interviewed told us that advanced biofuel production cannot achieve the statutory targets of 21 billion gallons by 2022. The shortfall of advanced biofuels is the result of high production costs, despite years of federal and private research and development efforts. The RFS was designed to bring about reductions in greenhouse gas emissions by blending targeted volumes of advanced and, in particular, cellulosic, biofuels, because those fuels achieve greater greenhouse gas reductions than conventional corn-starch ethanol and petroleum-based fuel. However, because advanced biofuel production is not meeting the RFS’s targets, the RFS is limited in its ability to meet its greenhouse gas reduction goals as envisioned. 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. 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. As stated above, the use of corn-starch ethanol has been effectively capped at 15 billion gallons.