President Obama and his administration have enacted so many foolish and cost-increasing energy policies, it is easy to think that they are his purview alone. But in 2007, Republicans were just as guilty. Seeds were planted and a garden of bad legislation took root in a totally different energy environment. At the time, the growth seemed like something worthy of cultivation. However, what sprouted up more closely resembles a weed that needs to be yanked out.
Last week, I wrote about Australia’s carbon tax that was pulled on July 17. Its seeds were also planted in 2007, though not germinated until 2011. Prime Minister Abbott promised to eradicate the unpopular plant—and after nearly a year of struggle, he did.
2007 was also the year of the Renewable Portfolio Standard (RPS). Around that time, more than half the states put in a mandate requiring increasing amounts of wind and solar power be incorporated into the energy mix the local utilities provided for their customers. It was expected that the RPS would become a much-admired garden with wind turbines blowing in the breeze and solar panels turning toward the sun like sunflowers.
Instead, the RPS has been an expensive folly. Angering the ratepayers, electricity prices have gone up. Groups, like the American Bird Conservancy, have filed suit against the U.S. Fish and Wildlife Service because it allows bald and golden eagles to be chopped up by wind turbines without punishment to the operators. Industrial solar installations are in trouble due to the massive land use and literally frying birds that fly through the reflected sunlight.
The mandates have created false markets and bred crony corruption that has the beneficiaries squawking when legislatures threaten to pull plants that have grown like kudzu. Yet, many states have now introduced legislation to trim, or uproot, the plants that sounded so good back in 2007. Though none has actually been yanked out, Ohio just put a pause on its RPS.
The RPS was state legislation; the RFS, federal.
Enacted, in 2005 and strengthened in 2007, the Renewable Fuel Standard (RFS)—also known as the ethanol mandate—had true bipartisan support (something that is difficult to imagine in today’s political climate). Both Republicans and Democrats lauded the RFS as America’s solution to U.S. dependence on foreign oil. In signing the Energy Independence and Security Act that contained the RFS, President George W. Bush promised it would end our addiction to oil by growing our gas. Although it was passed by Congress with the best of intentions, it, too, has become a costly, wasteful, and politically charged The RFS has created an artificial market for corn-based ethanol and driven up both fuel and food prices while threatening to damage millions of families’ most prized and essential possessions: their cars and trucks.
Times have changed. People are no longer lining up to view the garden of renewables as they do to stroll through the spectacular floral displays at Las Vegas’ Bellagio—where teams of specialized staff maintain the stylized gardens. At the Bellagio, you can gaze gratis. America’s renewable garden is costly at a time when our citizens are forced to cut back on everything else.
Compared to 2007, several things are different today. The big one is the economy. We, as a country, were still living large in 2007. We were also still dependent on oil from overseas and our purchases were funding terrorism. Plus, it was then generally believed by many that our globe was warming—and it was our fault because of burning fossil fuels. When presented with the idea of growing our gasoline, even though it might cost more, it seemed worth it—after all, what was a few cents a gallon to thumb our nose at the Middle East and save the planet?
But this is a different day. A few cents a gallon matters now. Thanks to the combined technologies of horizontal drilling and hydraulic fracturing, America is rich with oil-and-gas resources—and we could be truly energy secure if there were greater access to federal lands. Since 2007, the U.S. has trimmed our CO2emissions—while they’ve grown globally. The predicted warming (and accompanying catastrophes) hasn’t happened. Instead, it appears that the increased CO2 has generated record harvests—despite predictions to the contrary.
But the seeds planted in 2007 have grown false markets that need the mandates—both for electricity generation and transportation fuels—to stake them up, as they can’t survive on their own. Talk of yanking the mandates is likened to cutting down the once-a-year blossom of the Queen of the Night. “How could you?” “You’ll kill jobs!” Elected officials, such as Congressman Steve King (R-IA), who are normally fiscally conservative, vote to continue the boondoggles that benefit his state.
When the Energy Independence and Security Act was passed in 2007, it was assumed that gasoline demand would continue to rise indefinitely so larger volumes of ethanol could be blended into gasoline every year to create E10, a motor fuel comprised of 90% gasoline and 10% ethanol. Rather than requiring a percentage of ethanol, the law mandated a growing number of gallons of ethanol be used.
Instead, due to increased vehicle efficiencies and a bad economy, gasoline demand peaked in 2007 and began to decline, reducing the amount of gasoline consumed in the U.S. Still, the law requires refiners to blend ever-increasing volumes of ethanol into gasoline every year until 36 billion gallons of ethanol is blended into the nation’s fuel supplies by 2022.
It is the mandate that allowed the ethanol tax credit (a.k.a. subsidy) to expire at beginning of 2012. The growing mandates gave the corn farmers plenty of incentive.
In the modern era, with ethanol no longer needed due to America’s increasing oil production and the mandates’ unreasonable requirements, an unusual collection of opponents has risen up against ethanol: environmentalists and big oil, auto manufacturers and anti-hunger groups.
Much to everyone’s surprise, last November the EPA came out with a proposal to use its authority to make a practical decision to keep the mandate from increasing. The result was to be a cut in the amount of biofuels that refiners would need to mix into their fuels—a decision that was required to be made by the end of November 2013. To date, in the seventh month of 2014, the EPA still has not released the 2014 mandates. Refiners are still waiting.
On Thursday, July 24, White House Advisor John Podesta met with select Democrat Senators — including Heidi Heitkamp (D-ND) and Al Franken (D-MN) — to discuss the EPA’s November 2013 proposal to lower ethanol targets—which, according to reports, Franken called: “unacceptable.” The Hill quotes Franken as saying: “White House adviser John Podesta has indicated the Administration plans to raise the amount of ethanol and other biofuels that must be blended into the nation’s fuel supply.” And, in another report, The Hill says: “That may mean Podesta’s signal—that the levels of ethanol, biodiesel, and other biofuels will be increased in the EPA’s final rule—is as good as gold.” A decision from the EPA is expected to “be imminent.”
All of this amid new reports that ethanol has little if any effect on reducing greenhouse gas emissions blamed for climate change. A Congressional Budget Office report, released on June 26, states: “available evidence suggests that replacing gasoline with corn ethanol has only limited potential for reducing emissions (and some studies indicate that it could increase emissions).”
It may have been George W. Bush who planted the ethanol mandate, but it is the Obama Administration that is fertilizing it and keeping it alive, when it should be yanked out by its roots.