Rethinking the Ethanol Standard

Obamacare isn’t the only mandate Trump should dump, says IPI’s Dr. Merrill Matthews in The Washington Times. Let consumers decide at the gas pump if they want ethanol in their gasoline.

He writes:

President-elect Donald Trump cruised to victory promising to get rid of the mandate to buy health insurance. While he’s at it, how about getting rid of the mandate to buy ethanol?

The federal government mandates that virtually all gasoline include ethanol, known as the Renewable Fuel Standard (RFS). The Environmental Protection Agency (EPA), which oversees the ethanol program, recently released its 2017 guidelines for increased ethanol usage, calling for nearly 19 billion gallons of renewable fuel — and increase of nearly 700 million gallons over the 2016 level.

When Congress first embraced ethanol, legislators were convinced that adding it to gasoline would stretch fuel supplies, be less expensive and better for the environment, and reduce our reliance on oil imports.

As is turns out, most of those initial assumptions no longer appear to be true.

First, ethanol hurts drivers. Existing blends provide fewer miles per gallon, forcing drivers to pay more to travel. According to the Institute for Energy Research, the RFS has saddled American drivers with an extra $83 billion at the pump.

Second, auto manufacturers and AAA warn that increasing the percentage of ethanol in our gasoline past the current 10 percent “blend wall” — which some states are allowing — could harm engines, especially in older cars. But Congress mandated that oil refineries increase annually the amount of ethanol they mix with gasoline. The problem is that gasoline usage has remained relatively flat since the recession, so the only way to meet the mandate is to increase the ethanol blend — putting engines at risk.

Third, ethanol production is bad for the environment. About 40 percent of corn grown in the United States goes into our gas tanks. Farmers have plowed up massive tracts of grassland and wetlands to plant more corn, which is the key ingredient in most ethanol. That conversion releases carbon stored in soil, plus the corn must be harvested, transported and refined before being added to gasoline, raising questions about whether ethanol production generates more carbon emissions than ethanol-blending eliminates. The nonprofit Environmental Working Group has called the increased use of ethanol a “climate disaster.”

The Energy Independence and Security Act of 2007, while increasing the amount of ethanol to be added to our gas tanks, required the EPA to provide reports assessing the ethanol program. The EPA produced its first report in 2012, but failed to meet the next deadline.

As a result, the agency’s inspector general recently released a report calling out the EPA for neglecting this obligation, noting that the agency “has not complied with the requirement to provide a report every 3 years to Congress.” The inspector general went on to emphasize that this “information is needed to fully inform the EPA, Congress and other stakeholders of the environmental impacts of U.S. biofuel policy.”

In the wake of the inspector general’s condemnation, agency officials have promised to produce the next assessment by 2017.

Why the delay? Maybe the EPA knows the United States no longer needs renewable fuels to wean itself off foreign energy. Thanks to the rapid expansion of the domestic oil and gas industry, this country has passed Russia and Saudi Arabia as the world’s top energy producer.

Eliminating the RFS would also increase demand for gasoline, stoking renewed domestic production and accelerating our march to total energy independence.

During the presidential primaries, Mr. Trump proclaimed his support for ethanol in Iowa, a big ethanol-producing state. But since Mr. Trump understands why a mandate has skewed the health insurance market, he should understand why an ethanol mandate could skew the energy market.

We don’t need to eliminate the ethanol industry, just the mandate to use it. Let consumers decide at the gas pump if they want ethanol in their gasoline.

The Institute for Policy Innovation (IPI) is an independent, non profit public policy research organization based in Dallas. IPI resident scholar Dr. Merrill Matthews is available for interview by contacting Erin Humiston, (972) 874-5139, or erin@ipi.org.