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Friday RFS Roundup – 10/24

Discussion this week focused on the diversity in challenges and consequences facing the ethanol mandate from environmental damage to low consumer demand for biofuels.

More from this week:

Will Biofuels Be Better For Plastics Than For Vehicle Fuel?:

In Short: “Increased ethanol production is required to meet government mandates, but low demand for the fuel from consumers is leading companies now in production to seek out other uses for their alcohol fuel.”

EPA’s Sleight of Hand on Cellulosic Fuel Rule Change:

In Short: “Unfortunately, the EPA, which was created to protect the nation’s land, water, and air from pollution, has become a politicized propaganda instrument for the administration’s biofuels agenda, and is intent on pushing an RFS policy that is undermining its institutional mandates in addition to harming Americans more directly.”

Corn Belt Pollution: Louisiana Shrimp And Oysters Pay The Price:

In Short: “Nitrogen run-off from the nation’s booming Corn Belt is the single largest source of nutrient pollution in the Mississippi River basin, which drains a stunning 41 percent of the waterways in the contiguous United States. Massive amounts of water, sediment and nutrients wash off cornfields from as far away as Minnesota, enter the Mississippi River system, and eventually reach the Gulf. The problem may worsen if the Environmental Protection Agency (EPA) raises the ethanol mandate for blended gasoline next month—despite earlier commitments to reduce it. Fully one-third of corn grown in the U.S. already goes to ethanol refiners today, and that number could climb.”

What it means to “Grow Ethanol”

On a recent trip to Indiana, President Obama offhandedly mentioned that “growing” ethanol is one way to put rural Americans back to work. Unfortunately for us, ethanol doesn’t grow on trees and turning the crop from food to fuel actually requires a great deal of effort and resources.

The Renewable Fuel Standard (known as the ethanol mandate) is a government mandate to fill our gas tanks with biofuels. The policy was supposed to be better for the environment than traditional gasoline and a way to increase demand, and therefore prices, for American farmers. 

But in fact, multiple government and academic studies have found that it actually does more harm than good to the environment and the rural economies it was supposed to bolster.

Here’s how:

Environmental Damage

Corn uses the most fertilizer of all major U.S. crops—more than half of all commercial fertilizer applied to U.S. cropland (195 pounds of fertilizer per acre of corn). Nitrous oxide (N2O), a greenhouse gas that is released from the fertilizers used to grow corn, has 298 times the global warming potential of carbon dioxide and is the single largest source of pollution to the Gulf of Mexico’s “dead zone” and the second largest source of impairments to wetlands.

To refine corn into one gallon of E10, a 10% ethanol mixture that is standard today but not enough to continue meeting the mandate, requires 170 gallons of water versus the five gallons that gasoline requires.

Not to mention, when considering the full lifecycle, corn-based ethanol nearly doubles GHG emissions over 30 years and increases greenhouse gases for 167 years.

Rural Economies

While mandating ethanol has been good for ethanol producers, the policy has negatively impacted the livestock farmers and ranchers who rely on reasonable corn prices for animal feed. This has contributed to the closing of more than 60,000 pork, poultry and beef operations since 2007, when the policy was expanded.

Animal agriculture supports 20 times more jobs than the ethanol industry, so a policy that favors ethanol over food production hurts our economy.

While it’s true that right now corn prices are low, the Environmental Protection Agency — charged with making reasonable adjustments to the mandate annually — is more than ten months late in finalizing the 2014 mandate, which causes the kind of instability in the corn market that hurts everyone, corn and livestock farmers alike.

And cellulosic ethanol plants haven’t yet materialized as the rural job creators once hoped for. The federal government has spent hundreds of millions to prop up the cellulosic industry, yet many of the companies that received those funds have since gone out of business.

Forcing ethanol into our fuel supply damages both the American economy and our environment. Tell Congress to take action on this failing policy.

Friday RFS Roundup – 10/17

Earlier this week, a group of more than 30 oil refining executives wrote to the White House encouraging President Obama to lower the mandated levels of ethanol under the Renewable Fuel Standard. While the rule is currently awaiting final approval from the Office of Management and Budget, consumers are fearful as the potential for higher ethanol levels could lead to greater engine damage, increased food costs and rising gas prices.

More from this week:

•  Reuters: U.S. gas station constraints complicate 2014 biofuel mandate: officials:

In Short: “Refiners on Tuesday wrote to the White House, arguing against raising the proposed requirements for using ethanol and biodiesel in U.S. fuel supplies so close to year-end.”The Obama administration is trying to balance its support for renewable fuels with awareness of infrastructure constraints at gas stations as it finalizes targets for 2014 biofuel use, agency officials said on Tuesday."

Fuel Fix: Refiners to Obama: Keep renewable fuel quotas down:

In Short: “Refiners on Tuesday implored President Barack Obama to hold firm on plans to scale back renewable fuel quotas for 2014, warning that if the administration gives in to Corn Belt demands for higher mandates, it could cause gasoline prices to spike."

'Now is not the time to backtrack on a proposal to avoid economic disruption,' 31 refining executives said in a letter to Obama.  'Technological and market limitations exist, and consumers — not the federal government — should determine what goes in their cars.'”

Dear Mr. President…

After taking a few days to review the letter Senators Markey (D-NH) and Boxer (D-CA) sent you regarding the EPA’s recommendation to lower the Renewable Fuel Standard, we’ve taken the liberty of making sure you had a version that aligns with reality.

Check out our corrected letter below, which fact checks the many oversights on the environmental soundness of this policy and the viability of cellulosic ethanol — the second generation biofuels that the policy was supposed to stimulate but after hundreds of millions of federal dollars have yet to appear.

Refiners also took the opportunity this week to urge the administration to consider the consequences of raising the final mandate, this late in the year, for consumers.

Tell Senators Markey and Boxer to check their work!

Friday RFS Roundup – 10/3

This week, the media switched its focus from the EPA and OMB’s final deliberations on this year’s final ethanol mandate levels to the need for Congress to reform the Renewable Fuel Standard.

Year-after-year, farmers, refiners and consumers alike are forced to wait for EPA to finalize the mandate, most often reducing the cellulosic numbers down to nothing. After a decade of this failing policy, it is clearly time for Congress to take permanent action on the RFS, providing stability in our food and gas markets.

More from this week:

•  The Hill: Ethanol rules causing more harm than good:

In Short: “When it was first passed into law in 2005, and subsequently expanded in 2007, the RFS seemed to offer an array of benefits. By encouraging development of corn ethanol and other advanced biofuels, the RFS appeared to provide a way to diversify our nation’s fuel supply, reduce our reliance on foreign oil, cut greenhouse gas emissions and support rural communities. Projections showing an increase in gasoline demand also seemed to promise an expanding marketplace for these biofuels.

But this potential has not been realized.”

• The Hill: It’s past time to repeal RFS:

In Short: “America can’t afford an energy policy based on political calculations. The RFS is an unmitigated disaster. It has artificially created markets through a mandate designed to help a select few and has achieved none of its stated goals. Few of the original arguments that helped get it past Congress are still relevant.

We don’t need a broken government mandate to address our energy needs. The private sector and an abundance of natural resources have extended our energy production to the point that American oil exports are a hot topic of debate. The RFS mandate is a relic that does more harm than good.”

Great Falls Tribune: Let’s eliminate ethanol to save money:

In Short: “Simply put, the ethanol mandate was bad policy when it was approved almost a decade ago and it remains bad policy today. Congress approved it as part of an effort to strengthen U.S. energy security. But that goal has been achieved, not as a result of the ethanol mandate, but rather a dramatic increase in domestic oil production due to the shale revolution. In addition, there is less demand for gasoline because of improved gas mileage in new-model vehicles.”

Watertown Times: Time for Congress to repeal ethanol mandate:

In Short: “Instead of attempting to reform the renewable standard, Congress should repeal it to protect American consumers from higher fuel and food costs.”

The fundamental problem with the ethanol mandate

The Renewable Fuel Standard — America’s mandate to put ethanol in our gasoline supply — has caused unintended consequences across the economy, risking higher gas prices and plowing over natural conservation land. These consequences alone should be cause enough for Congress to revisit the ethanol mandate, but the fundamental problem with policy is simply a disconnect with economic basics.

As the chart above demonstrates, government-projected demand for government-mandated ethanol is far below the mandated levels, and will be for at least two decades.

Despite reality, Congress has yet to take significant action in reforming the mandate — talk about one hand not knowing what the other is doing. In fact, the Energy Information Administration (whose projections we used above) isn’t the only government entity to speak out against the policy:

  • The non-partisan Congressional Budget Office (CBO) released a report stating that enforcing the mandate could push gas prices up 9 percent — or 26 cents — per gallon in just three years.
  • The Environmental Protection Agency — responsible for implementing the nation’s ethanol policy — has provided evidence that shows ethanol produced 33 percent more emissions in 2012 than gasoline, and could increase GHG emissions by an additional 10 percent by 2017.
  • The Department of Energy has concluded that higher ethanol fuel blends like E85 (gasoline containing 85 percent ethanol by volume) lowers vehicle fuel mileage by 15 to 25 percent than when operating on E10. This means consumers are forced to return to the pump more frequently and at greater cost.
  • The National Academy of Sciences has demonstrated that high corn and soybean prices, prompted largely by the mandate, are driving one of the worst crop land conversion events in recent US history.
  • The Government Accountability Office is concerned that the largest increases in corn acres for ethanol production are projected to occur in the Northern Plains, which relies on irrigation and is already water-constrained. Parts of the region draw heavily from the Ogallala Aquifer, where water withdrawals for agriculture and other uses are already greater than the natural recharge rate from precipitation.

And while it’s true that the Environmental Protection Agency has the power to adjust the mandate every year, we’re 10 months into 2014 and still without a final ruling on this year’s mandate thanks to endless government red tape.

Tell Congress it’s time to take action on the Renewable Fuel Standard.

Friday RFS Roundup – 9/26

This week, all eyes were on the Office of Management and Budget and their role in the implementation of the Renewable Fuel Standard now that it is out of the hands of the Environmental Protection Agency.

More from this week:

•  Global OMB Should Uphold Proposed Rollback of 2014 Renewable Fuel Standard (RFS) Targets:

In Short: “Unfortunately, EPA is not an impartial umpire in controversies arising under the RFS. For EPA, the RFS is an important source of regulatory power, political patronage, and economic influence. Thus, in RFS policy battles, EPA’s interest more closely aligns with the corporate welfare of ethanol producers than with the consumer welfare of motorists, the economic viability of livestock producers, or the economic efficiency of refiners.”

The Daily Times: Corn ethanol mandate does more harm than good:

In Short: “Americans are spending billions of dollars every year on ethanol as an ingredient in gasoline and diesel fuel. The uncomfortable truth is that this is a huge waste of money.”

Oddfellows at the Office of Management and Budget

Autumn is upon us, and the final numbers for the Renewable Fuel Standard – America’s ethanol mandate – for this year are still in the hands of the Administration, a problem for everyone from consumers to refiners and even ethanol producers.

Now that the rule has moved from the Environmental Protection Agency to the Office of Management and Budget, its final hurdle, many of the Smarter Fuel Future coalition have come together to discuss the wide-ranging consequences of the policy.

In addition to discussing individual concerns, the coalition presented OMB with a petition from nearly 13,000 SFF advocates calling for a lowered ethanol mandate.

Here’s what they had to say:

Emily S. Cassidy, Environmental Working Group:

Environmental Working Group supports EPA's proposed RVO, to reduce corn ethanol by 1.39 billion gallons. Implementing the proposed RVO would have the same carbon reduction benefit as taking 580,000 cars off the road for one year. By holding firm, the OMB can send a powerful signal to investors to support the development of second generation fuels that actually reduce greenhouse gas emissions.

Nicole Wood, Boat US

We represent recreational boaters, not the marine industry, so we have a uniquely consumer end-user perspective. We commend EPA for addressing the current-day reality of our nation’s shrinking gasoline appetite. If we can reduce the pressure on gasoline to absorb unsafe levels of ethanol blends, we can greatly reduce unforeseen consumer safety issues. And for us at Boat US, keeping the mandate at a safe level is a clear issue of consumer safety.

Marlo Lewis, Competitive Enterprise Institute

Ever since EPA, in November 2013, proposed to cut back the 2014 RFS blending target from 18.15 billion gallons to 15.21 billion gallons, the agency has come under relentless pressure from the corn-ethanol lobby to withdraw the proposal.

Hints from EPA officials indicate the agency is in retreat. That is unfortunate. The existing 18.15 billion gallon target would compel refiners to buy billions of gallons more ethanol than can actually be sold as E10 (the highest blend compatible with today's fueling infrastructure, manufacturer liability and warranty policies, and consumer acceptance).

Refiners would either have to buy what they can’t sell or pay heavy fines and exorbitant prices for blender credits (RINs). Most of those costs would be passed on to consumers at the gas pump.

The political pressure on EPA to breach the blend wall – and the consequent peril to consumers – will only increase over time as RFS statutory targets ratchet up to 36 billion gallons in 2022.

Lukas Ross, Friends of the Earth

This weekend I joined with over 300,000 people in New York City to demand action on climate change.  People came together from all over the country, and all over the world to make their voices heard.  Meeting the challenge of climate change means doing everything possible, as quickly as possible, to lower emissions. Time and speed are of the essence.  Lowering the volumes for corn ethanol—a fuel that remains dirtier than gasoline by the EPA’s own analysis—is an important place to start.

Using corn ethanol now means more climate-disrupting emissions in the short term, precisely when the greatest reductions are necessary.

Nan Smith, National Taxpayers Union

For a regulatory policy to draw the concerned attention of a wide and diverse variety of groups and citizens, it truly must be a failure on many different levels. The Renewable Fuel Standard (RFS) has proved to be such a failure, as its long list of unintended consequences ranges from impacting the price of fuel at the pump to food cost volatility.

Raising the renewable volume mandate during this time of slow-economic recovery and ongoing high unemployment would create undue stress on families and businesses without any substantive environmental benefit. OMB should approve a rule at or below the EPA’s proposed volumes giving Congress time to revisit the underlying legislation, rather than expose countless millions to more unintended consequences.

Kristin Sundell, Action Aid

At ActionAid, we’re already seeing the impact of US biofuel mandates in the countries where we work. The effects are twofold – direct increases in food prices as a result of food crops such as corn being used for fuel, and communities being pushed off their land to make way for biofuels plantations, losing their sources of food and income in the process.

Since the RFS was implemented, we have seen massive spikes in global food prices.  In 2008, the number of hungry people reached almost 1 billion. In 2012, we saw the highest corn prices in history. A number of factors led to these spikes, but artificially high and inflexible demand for biofuels was a significant contributor. Between a quarter and a third of recent increases in global grain prices is estimated to have resulted from biofuel expansion. Between 2005 and 2011, U.S. corn ethanol mandates alone were responsible for $6.6 billion in additional corn import costs for developing countries.  Across the African continent, the cost to some of the most food–insecure countries in the world was $1.6 billion.   

We therefore strongly support reducing the Renewable Volume Obligations for food-based biofuels within the RFS.

Former Senator Wayne Allard, American Motorcyclist Association

We support the realistic change in Renewable Fuel Standard and Renewable Volume Obligations for ethanol proposed by the EPA last fall. We oppose any attempt by the administration to backtrack from the EPA’s position for a number of reasons, and are very concerned when we hear that the EPA may change course and recommend a higher standard for 2014.

If the EPA reverses its position, the market will be forced to absorb larger supplies of fuels with ethanol blends in excess of 10 percent. The proliferation of these higher ethanol fuels, such as E15, creates a practical and a legal hazard for the estimated 11 million motorcycles currently in operation. No motorcycle on the road today has EPA approval to use fuel with more than 10 percent ethanol. If a motorcyclist should happen to inadvertently use E15 – a strong possibility given the confusing labeling and lax EPA enforcement – the action would void the vehicle warranty and place the motorcyclist in violation of federal law.

If you’ve felt the pain of this failing policy, join us in calling for long-term, Congressional action to reform the ethanol mandate.

Friday RFS Roundup - 9/19

This week, Al Gore hosted his “24 Hours of Reality,” which focused on climate change and the media discussed how the Renewable Fuel Standard (RFS) is not only failing to help the environment, but may also be harming it.  

More from this week:

The Paper Magazine: Earth Talk for Sept 15, 2014: Ethanol's Unrealized Promise:

In Short: “Ethanol and similar “biofuels” made from corn and other crops seem like a good idea given their potential for reducing our carbon outputs as well as our reliance on fossil fuels. But recent research has shown that the federal government’s push to up production of corn-derived ethanol as a gasoline additive since 2007 has actually expanded our national carbon footprint and contributed to a range of other problems.”

Forbes: Renewable Fuel Standard: Running on Empty Rhetoric:

In Short: “The Environmental Protection Agency (EPA) is set to release its latest quota for the amount of biofuel that must be added to gasoline. The Renewable Fuel Standard (RFS) is intended to cut greenhouse gas emissions; in reality, the policy harms the environment by doing just the opposite. And by continuing to enforce the RFS, government officials are needlessly driving up prices for food and gasoline.

It’s time leaders admit that the RFS is a policy failure. When lawmakers created the RFS in 2005, they made two key assumptions that are now falsified.”

Motley Fool: Are U.S. Biofuel Targets Putting Your Car's Engine at Risk?:

In Short: “Car engines are manufactured to burn gas and up to 10% ethanol. Anything above that level could harm auto engines. To suggest there would be a public outcry if ethanol mandates started to destroy car engines is an understatement.

Like so many other government rules, however, biofuel mandates weren't structured as a relative percentage of actual consumption. They were based on an expectation of ever-higher gas demand. That made sense until gas demand started to fall, a trend that has been in place for the last seven years, according to energy analyst Carmine Rositano of industry watcher GlobalData.”

24 Ethanol Realities

Proponents of the ethanol mandate (known as the RFS, or Renewable Fuel Standard) promised Americans that their plan would save the environment; that making 10 percent of America’s fuel from the water, pesticide and land-intensive corn they grow would lower emissions and protect the land.

But 10 years later, America’s premier “environmental” policy is actually doing more harm to the environment than good.

In honor of Al Gore’s “24 Hours of Reality,” focused on climate change, we wanted to share some hard truths about ethanol fuel:

Turning wild lands into industrial biofuel fields

1. Between 2008 and 2011, eight million acres of grassland, shrub land and wetland were plowed under to grow corn, dramatically increasing carbon emissions by 85 million to 236 million metric tons of CO2 equivalent greenhouse gases per year. — Environmental Working Group
2. Global energy use from all sources is currently about 250 million barrels of oil equivalent per day. Therefore, biofuels are providing less than one-half of 1 percent of the world's energy needs. And in doing so, they are requiring a land area more than twice the size of California. - Bloomberg
3. Meeting the RFS mandate for advanced cellulosic biofuel in 2014 will require 4.8 million acres of land; in 2022, 44 million acres. - Colorado State University
4. To produce 20 billion gallons of cellulosic ethanol, 16-19 million acres of land is required for non-residue feedstocks. -- Biomass Research and Development Initiative
5. Producing enough cellulosic ethanol from switchgrass to displace one million barrels of oil per day would require switchgrass to be planted on 25 million acres of land — an area about the size of Kentucky. – AEI

Consuming and polluting precious water resources

6. It takes five gallons of water to refine one gallon of gasoline; 146 gallons for one gallon of E10 containing cellulosic ethanol; 170 gallon for one gallon of E10 containing corn-based ethanol. -- University of Colorado
7. Nearly 1 in 10 gallons — nine percent — of all water consumed in the United States will go toward biofuel production by 2030. -- United Nations
8. Eighty-seven percent of irrigated corn is grown in regions with high or extremely high water stress. — Ceres
9. Corn uses the most fertilizer of all major U.S. crops, more than half of all commercial fertilizer applied to U.S. cropland (195 pounds of fertilizer per acre of corn). -- Ceres
10. Nitrous oxide (N2O), a greenhouse gas that is released from the fertilizers used to grow corn, has 298 times the global warming potential of carbon dioxide. – Environmental Working Group
11. Nitrogen run-off from U.S. corn acres damages lakes, streams and groundwater and is the single largest source of pollution to the Gulf of Mexico’s “dead zone” — an area the size of Connecticut — and the second largest source of impairments to wetlands. — Ceres

Raising emissions

12. Even if corn ethanol caused no emissions except those from land-use change, overall GHGs would still increase over a 30-year period. – Science Magazine
13. Corn-based ethanol nearly doubles GHG emissions over 30 years and increases greenhouse gases for 167 years. – Science Magazine
14. The loss of trees cleared to make room for new biofuel crops increases emissions. – MIT
15. If GHG emissions from the indirect land use changes are considered, the environmental impact of E85 (a mixture of 85 percent ethanol and 15 percent gasoline) is, on average, 33% greater than that of gasoline. – Environmental Science and Technology
16. “Corn ethanol has not only been a disaster for consumers, the hungry and for most farmers, it has also been a disaster for the environment. We have lost more wetlands and grasslands in the last four years than we have in the last 40 years.” – Scott Faber, Environmental Working Group
17. Despite statements from the EPA saying the RFS is intended to stimulate second generation biofuels, corn ethanol still fulfills 80 percent of the mandate.
18. Biofuels from switchgrass, if grown on U.S. corn lands, increase GHG emissions by 50 percent. – Science Magazine
19. Converting American corn fields to grow switchgrass would trigger emissions from land-use change that would take 52 years to pay back and increase emissions by 50 percent over a period of 30 years. – Science Magazine
20. Fueling an ethanol plant with switchgrass would require delivering a semi-truckload of the grass every six minutes, 24 hours a day, which adds to emissions associated with ethanol development. -- Rolling Stone
21. Use and production of biomass ethanol is projected to result in a higher release of air pollutants, such as ozone and sulfur oxide, than petroleum-based fuels. -- National Academy of Sciences
22. Ethanol burned in an engine produces more than twice as much ozone as the equivalent amount of gasoline. – The Economist
23. Expanding biofuels feedstock production on marginal lands compete with wildlife and fowl habitat. -- Congressional Research Service
24. "Ethanol use does little to prevent global warming and environmental deterioration, and clear-headed policy reforms could be urgently carried out, if American politics would permit it." – Amartya Sen, Nobel Prize-winning economist

Oh, and speaking of Former Vice President Gore, here’s what he has to say about the ethanol mandate:

“It is not a good policy to have these massive subsidies for first-generation ethanol. The benefits of ethanol are trivial but it's hard once such a program is put in place to deal with the lobbies that keep it going."

The White House needs a reality check—it’s time for ethanol mandates to stop posing as sound environmental policy.