It was a positive step for the Environmental Protection Agency to lower the required ethanol content for transportation fuel sold in the U.S. under the renewable fuel standard for 2014, but it's not enough.
We need to do more and repeal the mandate entirely.
The renewable fuel standard is a broken federal policy that has sought for too long to mandate production and use of a fuel that is not commercially viable – and has well-documented negative impacts on our economy. Higher costs at the pump, more expensive food, and an environmental benefit that is dubious at best amount to a policy that needs fixing, and fast.
Repealing the mandate would bring certainty and reliability to the fuel markets and would stop the harmful impacts this program has had on consumers and businesses. The standard increases prices in multiple sectors of the economy. Most directly, it raises gasoline and diesel prices. A NERA Economic Consulting study concluded that the new standard will cause a 30-percent gas price increase and a 300-percent diesel price increase in 2015.
What’s more – the renewable standard leads consumers to buy more gasoline because ethanol reduces fuel efficiency. U.S. News reports that ethanol delivers 25 percent fewer miles per gallon than gasoline does. Ethanol also has corrosive properties that damage engines. It clearly should not be mandated in increasing quantities in our transportation fuel. The costs are too high and the benefits are negligible.
And the costs are not only felt at the pump. They are also felt in the grocery store. Corn – a vital food staple – is significantly more expensive. Furthermore, anything made with corn or its sweeteners will also become increasingly expensive as more corn is diverted away from food and animal feed and toward fuel instead. And of course, nearly all meats are made more expensive by the standard, as the cost of feeding livestock has increased dramatically since it was implemented.
The standard also has an unintended negative impact on the environment, which it was designed to help protect. Ethanol requires fertilizer, pesticides, and a huge amount of water. A lot of energy is needed to create the corn and then distill the ethanol for fuel. Studies show that it is more detrimental to the environment to use the land, fertilizers, pesticides, and water necessary to grow more corn for ethanol use than it is to refine more petroleum.
The Organization for Economic Cooperation and Development said, “The overall environmental impacts of ethanol and biodiesel can very easily exceed those of petrol and mineral diesel.”
The recent EPA hearing has called attention to the fact that the renewable fuel standard is a failed and harmful piece of legislation. The mandated production levels are unrealistic and unattainable and have put a drain on the economy. Fuel prices and food prices are higher, and the environment is no better off.
It needs to be repealed, and let the marketplace best determine how much ethanol should be in fuel.Harry C. Alford is the president and CEO of the National Black Chamber of Commerce and is the chair of the U.S. Chamber of Commerceâ€™s Government Oversight Committee.