Ethanol policy reform–the rare place where environmentalists and energy advocates agree

RFS enforcement is akin to fining people for not having enough dodo birds on their property

copgivingticketWe all expect to pay a price for missing deadlines—fail to pay a parking ticket on time, and you may find a warrant out for your arrest. People have lost their jobs when they can’t get the work done on schedule. Students who turn in papers late get lower grades—maybe even fail the class.

But the Environmental Protection Agency (EPA) can apparently miss deadlines (many) with impunity. For the past two years, the EPA has failed to meet the statutory deadline under the Renewable Fuel Standard (RFS), requiring the agency to tell refiners how much ethanol to blend into the nation’s motor fuels.

In November 2013, the EPA did make an attempt to announce the proposed 2014 blend levels—which by then were already months past the legally mandated deadline. The EPA surprised and pleased the RFS opponents when it utilized its authority to adjust the mandate and took market conditions into consideration. The EPA set the proposed 2014 standard to a level lower than 2013’s, even though the law requires increasing amounts. Ethanol producers, who were expecting the usual uptick, loudly opposed the reduction. They made so much noise, the EPA agreed to reconsider. To date, the 2014 standards have not yet been announced.

Then, on November 21, 2014, the EPA announced it would make a decision next year (2015) on how much ethanol refiners had to add to gasoline this year (2014)—yet, if refiners don’t meet the unknown requirement, they get fined. That’s akin to handing out the class syllabus after the students have failed the final exam.

With the goal of a reduction in foreign oil imports, Congress enacted the RFS in 2005 and revised it in 2007—which also provided incentives to America’s fledgling ethanol industry. At the time, gasoline demand was rising to an all-time high and oil imports comprised more than 58% of U.S. oil consumption. No doubt Congress believed it was saving American consumers from their addiction to oil.

Then the world changed. The U.S. economy plunged into its worst recession ever, unemployment soared, and gasoline demand fell sharply. Meanwhile, advancedoilwells drilling technologies, including the long-used hydraulic fracturing and newer horizontal drilling, began producing oil and natural gas from U.S. shale formations—which were previously uneconomic to develop—leading to America’s 21st Century energy boom.

Today the U.S. is the world’s largest natural-gas producer and is projected to pass Saudi Arabia as the number one oil producer. With crude oil supplies flooding the market, prices have been cut in half. Although fears over foreign-oil dependence have abated, the U.S. remains stuck with an ethanol mandate that is outdated, unworkable, and even harmful to vehicles, engines, and the environment.

Consider just some of the RFS’s flaws.

The law requires refiners to cap their blending of corn ethanol and use more cellulosic biofuels. Never mind that very little cellulosic biofuel has ever been produced—even according to the EPA’s own data. But that fact hasn’t prevented the EPA from levying millions of dollars in fines against refiners for failing to use the phantom fuel, without any assurance that enough cellulosic biofuel will ever be available. It’s kind of like receiving a bill for something you cannot buy because it doesn’t exist, but you’re being charged anyway.

The nonpartisan Congressional Budget Office reports cellulosic biofuels are “complex, capital-intensive, and costly.” Given the difficulty of producing them, capacity will “fall far short of what would be necessary to achieve the very rapid growth in the use of cellulosic biofuels required” under the RFS.

Then there is the “blend wall” problem. With less gasoline being sold than Congress anticipated, refiners cannot add ever-rising amounts of ethanol to gasoline without exceeding E10—the fuel consisting of 10% ethanol and 90% gasoline sold virtually everywhere in the country today. To get around the blend wall issue, the EPA granted a “partial waiver” allowing the sale of E15, a fuel blend containing up to 15% ethanol for model-year 2001 and newer vehicles.

The EPA’s quick fix made a bad situation much worse, and all at the taxpayers’ and consumers’ expense. Ethanol levels higher than 10% can damage or destroy vehicle engines, according to a study conducted by the well-respected Coordinating Research Council. Automakers are voiding warranties and refusing to be held responsible for mechanical problems caused by fuels containing more than 10% ethanol. And the marine industry warns of potential engine failures on various types of watercraft powered by the industry’s most common engines.

boatmotorThe Outdoor Power Equipment Institute (OPEI) is so concerned about safety hazards that it has launched a campaign telling consumers to “Look Before You Pump.” OPEI says equipment ranging from lawn mowers to “jaws of life” devices could be damaged by ethanol’s corrosive properties if used in concentrations above 10%. Do want your expensive new lawn mower to quit the third time you use it? You certainly want life-saving devices to work on demand.

And that’s not all. Ethanol contains less energy than gasoline, forcing motorists to fill up more often, thereby causing more consumer expenditures. Ethanol production has driven up food prices here and abroad. Additionally, some studies indicate ethanol usage increases greenhouse gas emissions. Politico reports: “Some Green groups have vocally abandoned their support for corn ethanol, blaming the crop for polluting water supplies, wiping out conservation land, and even increasing carbon emissions.” According to Craig Cox, director of the Ames, Iowa, office of the Environmental Working Group, an environmental group that opposes the mandate as it is now structured: “Corn ethanol’s brand has been seriously dented in the last 18 months. …it certainly doesn’t occupy the same pedestal that it occupied 2 years ago.”

But then, despite the fact that the EPA says decisions are made on merits, politics entered the scene. Rumors flew that the announcement of the 2014 blend levels was delayed to help Rep. Bruce Braley (IA-D) in his Senate bid. Braley was pushing for an increase in the proposed levels and was hoping that he would be able to influence the White House to raise the targets.

Additionally, a Republican-controlled Senate would be more likely to pass legislation to reform or repeal the RFS. Braley was quoted in Politico saying: “Voters in Iowa look at where I stand on this issue and where my opponent stands, who’s supporting me in this campaign and who’s supporting [Sen.-elect Joni Ernst].” The Politico story states: “Iowans say wavering on corn ethanol once would have been certain political suicide in a state where 90% of the land is farm acreage. So Braley sought to capitalize on Ernst’s expressed qualms about big government, portraying her as someone Iowans can’t trust to fight for them.” Yet, Ernst, a Republican, won the Senate seat formerly held by Democrat Tom Harkin by 8.5 percentage points.

The EPA’s unwillingness to do its job by setting ethanol volumes—along with ethanol’s loss of “political heft”— should provide the impetus for ending the complex and wasteful RFS program. Ethanol is a rare topic where environmentalists and energy advocates agree. Now is the time to get our elected officials all on board. As soon as the new Congress convenes in January, it should give the RFS an “F” and reform, revise, or even repeal it.

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NOTE:  A version of this content was originally published on Breitbart.com.

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About the Author: Marita Noon

Marita Noon

CFACT policy analyst Marita Noon is the author of Energy Freedom.,

  • I wonder what grade Ms. Noon would receive for turning in a paper riddled with misinformation, weak citations and flawed logic?

    Here are the facts on ethanol according to actual global authorities, not rigged studies funded by the oil industry.

    –Over the past decade, the RFS has helped us cut our dependence on foreign oil nearly in half—from 60 percent to 33 percent—and has supported 400,000 jobs in cities like Des Moines, not Abu Dhabi.

    –According to Argonne National Laboratory ethanol reduces GHG emissions by an average of 34 percent compared to gasoline.

    –In 2013, the 13.2 billion gallons of ethanol blended into gasoline in the United States
    helped reduce GHG emissions by approximately 38 million metric tons, which is the equivalent of removing roughly 8 million automobiles from the road.

    –A 2013 World Bank study demonstrated that the primary driver of increased global food costs is the rising price of crude oil, not higher farm commodity prices or ethanol production.

    –The U.S. Environmental Protection Agency has approved E15 for consumer use in vehicles MY2001 and newer, which currently make up 80% of all vehicles on the road.

    –The U.S. Department of Energy drove 86 different vehicles, representing all makes and models, a total of 6 million miles on E15 and found no signs of harm to emissions equipment or issues with engine durability.

    –The oil industry funded the Coordinating Research Council’s (CRC) deeply flawed E15 study. CRC’s engine durability testing was very limited—only 8 vehicles were tested, compared to the 86 vehicles tested by the Department of Energy. CRC put undue pressure on engine valves and chose two engines with known durability issues, one of which had even been recalled.

    –The oil industry recently celebrated one century of subsidies and tax loopholes. These giveaways cost American taxpayers $7.8 billion per year. Worldwide, the oil industry collects $500 billon annually in government handouts. The renewable fuels industry voluntarily gave up its tax credit in 2011.

    When you look at the facts, it’s clear that the RFS has been a success. American jobs have been created that cannot be outsourced. Rural communities have been revitalized. Our nation’s energy independence has been increased. And what’s more is that all of this progress has been made while giving consumers a choice and much needed savings at the pump. Homegrown solutions like the RFS deserve our steadfast support.

    –Tom Buis, Growth Energy CEO