Policy: Environment & Energy

Congress should repeal ethanol mandate before it does more harm to consumers, the environment

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At a recent House subcommittee hearing, the National Chicken Council testified to federal lawmakers regarding the negative impacts created by the Renewable Fuel Standard. The fact that the chicken industry has special insights regarding federal energy policy is a clear signal that the RFS has been an unmitigated disaster.

Enacted in 2005, RFS requires that fuel producers blend specified amounts of biofuels (e.g. ethanol) into their products. The RFS law was supposed to spur a lasting transition from traditional fossil fuels toward green-friendly fuel sources like ethanol, and thus substantially curtail greenhouse gas emissions.

In practice, RFS has failed to deliver on its alleged environmental benefits while imposing unjustifiable costs on consumers and businesses alike. RFS is a failure that needs to be scrapped entirely.

For starters, RFS harms the environment, it does not benefit it. While it is true that ethanol burns cleaner than traditional fossil fuels, this is only part of the story. Just like you can't determine who won a baseball game by looking at the score from one inning, the entire ethanol cycle — from planting through the final users — must be considered.

Producing the massive quantities of corn needed to make ethanol causes environmental damage, including damage to wetlands, the destruction of forests and grasslands, and increased water pollution. When all of these impacts are considered, it becomes clear that ethanol is an environmental liability.

As a representative from the Environmental Working Group noted at the House hearing, these negative lifecycle impacts are expected to persist for the foreseeable future.

In addition to the environmental damage RFS creates tremendous economic damage. Starting with basic food costs, the reason the National Chicken Council was testifying, RFS has helped create the long-term spike in the price of corn.

That development is great for corn farmers, but bad for everyone else. Farmers who feed corn to their livestock have been hit hard, as have restaurants and their customers. Overall food prices continue to rise faster than inflation.

The problems don't end there. Thanks to serious miscalculations, RFS ended up setting production standards for renewables that are impossible for the private sector to meet.

Starting in 2010, the law required gasoline companies to blend in "cellulosic" ethanol — derived from landfill waste, corn stalks and other organic debris — or pay fines. The problem is that cellulosic ethanol didn't actually go into commercial production until 2012. And even then, it wasn't produced in quantities great enough to meet RFS requirements.

This year, the mandate for corn-based ethanol can't be met, either. When crafted, the RFS was based on forecasts of the amount of gasoline American vehicles would burn. Those predictions have proven substantially too high, resulting in a mandate that refiners blend about 500 million excess gallons of ethanol.

The Environmental Protection Agency has responded poorly to the mounting problems of the RFS. For example, when it became clear that cellulosic ethanol wouldn't become available in time for refiners to meet their targets, the EPA didn't waive the requirements, but just slightly reduced them. Companies were fined millions of dollars for failing to use a product that didn't exist. Eventually, the courts had to step in to halt this obvious injustice.

Last year, after a sustained drought shrunk corn supplies, the price of corn — and, in turn, the price of ethanol — shot up. Several states sought waivers from the RFS, but the EPA refused. It simply forced customers to pay higher gas prices and exacerbate the corn shortage.

Most recently, in response to the problem of surplus ethanol production, the EPA decided to allow gas stations to sell fuels containing exceptionally high concentrations of ethanol, so long as they also slap a warning label on the pump.

But fuel with too much blended ethanol is incompatible with most car engines. Its use potentially voids millions of car warranties. And such fuel actually gets much lower gas mileage than traditional gasoline.

The RFS is a toxic mess. This most recent House hearing should make it clear to legislators that they need to step in and repeal this law.

Wayne Winegarden, PhD, is senior fellow at the Pacific Research Institute and a contributing editor to EconoSTATS at George Mason University.

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