You may recall that over the past few years, the Pentagon has been funding a number of efforts to develop biofuels. On Earth Day 2010, the Navy flew an F-18 using a mixture of conventional jet fuel and biofuel derived from camellina, a plant in the mustard family. After the flight, Secretary of the Navy Ray Mabus declared that the Navy and Marine Corps were committed to “reducing dependence on foreign oil as well safeguarding our environment.”  Since then, Mabus and the Navy have continued to hype the potential of biofuels and its effort to create a “Great Green Fleet” of ships. And in March, the Navy insisted its alt-fuel program won’t get hit by the sequester.

Now comes one of the Navy’s best and brightest, Captain T.A. Ike Keifer. In March, Keifer, an aviator who has been deployed seven times and spent 21 months in Iraq, published a scathing indictment of the biofuels sector in Strategic Studies Quarterly, the U.S. Air Force’s most-prestigious journal.  Alongside articles about nuclear weapons and terrorism, was Kiefer’s broadside: “Energy Insecurity: The False Promise of Liquid Biofuels.” The key paragraph:

"Imagine if the US military developed a weapon that could threaten millions around the world with hunger, accelerate global warming, incite widespread instability and revolution, provide our competitors and enemies with cheaper energy, and reduce America’s economy to a permanent state of recession. What would be the sense and the morality of employing such a weapon? We are already building that weapon—it is our biofuels program. For the sake of our national energy strategy and global security, we must face the sober facts and reject biofuels while advocating an overall national energy strategy compatible with the laws of chemistry, physics, biology, and economics."

To be certain, there are many critics of the biofuels business. Peter Brabeck-Letmathe, the chairman of the Swiss food giant Nestle has declared that using food crops to make biofuels is “absolute madness.” Just a few days ago, Alan Shaw, the former CEO of Codexis, the first “advanced” (made from non-food crops) biofuel company to be publicly traded on a US stock exchange, said flatly that  it was impossible to convert crop waste, wood, and plants like switchgrass into motor fuel and do so economically. Shaw said it was wrong to base the motor fuel industry on plants. “The feedstock is wrong,” he said.

Read more >>

From skyrocketing RIN prices to engine damage, land-use competition to higher animal feed costs and feeding the world’s hungry, organizations are dealing with the effects of this government boondoggle every day.

Below, you can read the comments on the first two white papers and check back as we update for each white paper issue area.

Paper 1- Blend Wall / Fuel Compatibility Issues

• American Fuel and Petrochemicals Manufacturers Comments
• Institute for Energy Research Comments
• Competitive Enterprise Institute Comments
• EPRINC Comments
• Clean Air Task Force Comments

Paper 2- Agricultural Sector Impacts

• American Fuel and Petrochemicals Manufacturers Comments
• National Chicken Council Comments
• Competitive Enterprise Institute Comments
• ActionAid Comments
• American Frozen Food Institute Comments
• National Turkey Federation Comments
• Advanced Economic Solutions Comments
• Grocery Manufacturers Association Comments
• FarmEcon, LLC Comments
• National Council of Chain Restaurants Comments
• National Restaurant Association
• New England Complex Systems Institute Comments

The ethanol debate is no longer just a debate about fuel or food.  It is also a debate about jobs, small business, and economic growth.  The federal government’s creation of an artificial market for the ethanol industry has triggered a domino effect that is hurting American consumers, livestock producers, food manufacturers, and retailers.  A policy that started with good intentions has resulted in a slew of unintended consequences.

The Renewable Fuel Standard (RFS) mandates that 36 billion gallons of renewable fuels be part of our nation’s fuel supply by 2022.  However, almost the entire mandate is currently being fulfilled by corn ethanol.  One of the greatest unintended consequences of the RFS is the steep increase in the price of corn.  As the amount of corn being used for fuel goes up each year, the problem grows worse.  While more corn supplies are being diverted to ethanol production, corn prices have climbed significantly.  Between 2005 and 2011, corn prices rose by $5 per bushel.  Then last summer, severe drought coupled with demands from the RFS sent corn prices to record highs. Simply put, the ethanol mandate has driven up costs at the expense of food and feed uses.

A few weeks ago, I introduced the RFS Elimination Act, which would completely get rid of the RFS. I also introduced the RFS Reform Act, which would eliminate corn-based ethanol requirements, cap the amount of ethanol that can be blended into conventional gasoline at 10 percent, and set the level of advanced biofuels production at more achievable levels.

Read more >>

Opposition for biofuels stretches across the globe.

In the video above, Action Aid UK calls attention to the folly of burning our food for fuel.

In 2011, the United States—the world’s largest food exporter—converted 40 percent of its corn crop into fuel in order to satisfy the Renewable Fuel Standard (RFS). In fact, the total amount of ethanol produced in the United States in 2011 was 13.95 billion gallons, enough to feed 570 million people that year. This practice of converting food into fuel drastically restricts global corn supply, and continues to have real consequences for the 1.2 billion people around the world living on $1.25 or less per day.

Sign our pledge to demand change. 

In the video above, Jim Currie of the National Marine Manufacturers Association, a Smarter Fuel Future partner, discusses the dangers of E15.

E15 is a blend of fuel containing 15 percent volume ethanol and 85 percent volume gasoline. While E10 has been proven to be a safe and reliable gasoline for more than 20 years, the same cannot be said about E15. Despite this reality, EPA approved E15 for sale into the general gasoline pool for vehicles made in and after 2001.

Numerous studies show that gasoline blends containing more than 10 percent ethanol can cause engine damage in boats, cars and smaller engines including chainsaws, lawnmowers, and snowmobiles. As a result, vehicle manufacturers have warned that the use of E15 will void warranties, leaving consumers vulnerable to expensive repair bills.

But it is time for Big Ethanol to have a reality check.

Renewable Identification Numbers — credits managed by the EPA to determine compliance with ethanol blending requirements — are not free, as ethanol lobbyists inanely claim. If RINs are free, why did market analysts put out the warning on March 13 that RIN prices have skyrocketed from less than a penny a gallon for ethanol in late 2012 to more than $1 a gallon, significantly increasing the cost of RFS compliance for U.S. refiners in 2013?

Keep in mind that ethanol producers have no obligation to supply their product under the RFS mandates; their limited responsibility in this process entails attaching a RIN to each gallon of biofuel they produce. Refiners and importers, on the other hand, are obligated to demonstrate to the EPA that they’ve blended the RFS-mandated volumes of ethanol into gasoline, or obtained sufficient RINs if they’ve reached the point at which their fuel cannot hold any more ethanol (due to lack of consumer demand and the constraints of infrastructure). When refiners and importers have reached this ethanol maxing-out point, or “blend wall,” they have to buy those RINs on the open market — but they’re not the only entities buying and selling.

Marketers who buy the base gasoline from refiners and importers and combine it with ethanol receive those ethanol RINs. These marketers have no obligation under the RFS and are free to sell the RINs on the open market or directly to obligated parties.

In addition to the “free RINs” sham, the ethanol lobby touts that corn ethanol is lowering gasoline prices, but they fail to account for the fuel’s lower energy content. Perhaps they’re simply not aware that ethanol contains 33 percent less energy per gallon than gasoline contains. Vehicles fueled with ethanol cover fewer miles per gallon than those running on conventional gasoline, meaning that if more ethanol makes its way into gasoline, consumers will be filling up their vehicles more often. Furthermore, when adjusted for this energy difference, AAA’s fuel gauge report shows E85 is more expensive than gasoline. On Friday, April 19, for example, nationally energy adjusted E85 at $4.13 per gallon was running 62 cents per gallon higher than regular gasoline, which averaged $3.51 per gallon.

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The reader doesn’t need a PhD in economics to see the smoke and mirrors in the Buis and Dinneen piece. Early on, they claim that Renewable Identification Number (RIN) credits for ethanol are “free,” and that they were “created at the oil companies’ insistence.” Then in the very next sentence they say that early this year “the price of RINs rose dramatically,” and later in their op-ed state that petroleum industry trade groups are spending “millions of dollars” to attack the renewable fuel mandates.

Now regardless of what the reader may think about oil companies, the above claims make no sense. Here’s what really happened: The federal government has established a Renewable Fuel Standard (RFS) that requires refiners to blend in a minimum amount of ethanol into the nation’s fuel mix. Recognizing that certain refiners are closer geographically to the source of ethanol, the refining industry asked that a credit trading system be implemented. This way, if it were cheaper for Refinery X to blend in additional gallons of ethanol, it could more than meet its quota of the mandate, to take the onus off of Refinery Y, where it would be more expensive. In order to share the pain equitably, Refinery X would sell its surplus RIN credits to Refinery Y. Thus, the nation as a whole would still meet the aggregate ethanol mandate required by the federal government, while minimizing the economic costs of compliance. This is the limited sense in which the oil industry “asked” for the RIN system.

As far as Buis and Dinneen’s claims that RINs are “free,” the simple fact is that RIN credits spiked from 7 cents early in 2013 to over $1 in March. Of course this represents a genuine burden to refiners. The federal mandate is causing individual companies to do things that they otherwise would not choose to do. If it really made economic sense to blend in 13.8 billion gallons of ethanol into the fuel mix this year (what the RFS requires), you wouldn’t need a federal mandate forcing the refiners to act this way.

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The U.S. renewable fuel standard is set to grow from 15.2 billion gallons of biofuels to 36 billion gallons by 2022. The presumption when the timetable was written in 2007 was that cellulosic biofuels – those made from nonfood plant matter like switchgrass and corn stover – would make up the vast majority of the new supplies.

That hasn’t happened. As the UCS noted:

When created in 2007, the RFS contained a 2013 goal of one billion gallons of cellulosic ethanol. While the industry is rapidly commercializing — two commercial cellulosic biofuel facilities are starting up, and others are under construction – it is happening slower than anticipated due to the 2008 financial crisis, resulting in a revised goal of 14 million gallons that reflects current production capacity.

The UCS, like many analysts, doesn’t expect the industry to come anywhere near its 16 billion gallon target by 2022 – the Energy Information Adminstration last year put the projected shortfall at a whopping 13 billion gallons.

That, says the UCS, leaves the Environmental Protection Agency with a crucial decision: keep the overall target at 36 billion gallons, using food-based “advanced” biofuels – such as biodiesel made from soy and ethanol made from sugarcane – to cover the non-food feedstock shortfall; or adjust the overall advanced mandate by the amount of the cellulosic shortfall. That would likely result in 15 million gallons of mostly corn ethanol, 5 billion gallons of advanced  (“primarily sugarcane ethanol and vegetable oil biodiesel,” UCS said), and then as much cellulosic biofuel as the industry manages to turn out.

There are fans of sugarcane ethanol out there, who cite its “energy balance” (the energy input/output ratio) advantage over corn ethanol, and the U.S. could import more such ethanol from Brazil. That, however, would likely prompt Brazil to import more corn ethanol from the United States to meet its own domestic demand. So the result would be more pressure on U.S. corn supplies.

“The RFS was designed to promote renewable fuels that don’t compete with food supplies,” Jeremy Martin, senior scientist with UCS’s Clean Vehicles Program, said in a statement. “We can’t afford additional strains on our food supplies, especially when the drought is expected to continue through 2013.”

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Bob Dinneen, RFA president, told the Financial Times, “We’re trying to be reasonable,” in light of the fact that production of advanced biofuels, like sugarcane-based ethanol, is essentially nonexistent.

One of the primary goals of the RFS is to promote domestic fuel production. However, biofuels producers have been relying on sugarcane-based ethanol imports from Brazil to satisfy the advanced biofuels requirement of the RFS. The RFS is not only failing to achieve its intended goals, but this latest news proves that the controversial and unrealistic mandate is completely out of step with market conditions here in the United States and across the globe. 

Now even the ethanol lobby is admitting it. Read the full article here and below.
 

Gregory Meyer, April 18- The US ethanol lobby has asked Washington to put the brakes on government biofuels targets, in an acknowledgment of a widening gap between policy goals and reality at petrol stations.

The request is a significant policy reversal by the Renewable Fuels Association, which was a powerful force behind the passage of the US’s aggressive ethanol mandate in 2007.

The mandate has helped the ethanol industry to double output and increase its corn consumption to more than 40 per cent of the domestic crop. Known as the Renewable Fuel Standard, the requirement is under attack by the oil and meat industries and some food policy experts.

This year’s draft mandate requires the sale of 16.55bn gallons of biofuel inside the US. Citing “uncertainty” over how to meet this goal, the Renewable Fuels Association advised the government to pursue a “reduction in the overall RFS” in a letter to the Environmental Protection Agency.

This was the first time the association recommended cutting the total renewable fuel mandate, the association confirmed. “We’re trying to be reasonable,” Bob Dinneen, president, told the Financial Times.

The mandate has become increasingly hard to achieve. Flat US gasoline demand limits how much ethanol can be blended. Oil companies refuse to sell fuel containing more than 10 per cent ethanol, creating a “blend wall”.

The fuels association said it asked Washington for the reduction because production of “advanced biofuels” made from biomass other than grain was falling short of its 2.75bn-gallon portion of the mandate.

Sugarcane-based ethanol imported from Brazil can also satisfy the advanced biofuels requirement. The Renewable Fuels Association argues this supply is too irregular to meet the mandate.

“Brazil has not been a terribly reliable supplier. I want EPA to take a real hard look at the potential for Brazil, and make a determination,” Mr Dinneen said.

Unica, Brazil’s sugar and ethanol industry group, wants the mandate upheld, saying the country “will be able to meet and, if necessary, surpass” US import projections.

Bill Lapp, of agricultural consultancy Advanced Economic Solutions, said that the mandate’s supporters until recently spoke with one voice on the mandates.

“Upon reaching the blend wall, we find the different factions first favouring their share of the pie, ahead of any support for the overall biofuel policy objectives,” he said.

CME May ethanol futures were at $2.469 per gallon Thursday, up 0.5 per cent. Nymex May gasoline was at $2.7249 per gallon, down 0.2 per cent.

The biofuels mandate, which stood at 4.7bn gallons in 2007, is scheduled to keep rising beyond this year’s level to 36bn gallons in 2022. The EPA has never before reduced the overall mandate.

The Renewable Fuel Standard (RFS), implemented in 2007, requires the gasoline industry to blend increasing amounts of biofuels into traditional gasoline. The EPA is now seriously considering a proposal — RFS2 — that would tighten one of the law’s key provisions, requiring oil refineries to replace “e10″ gasoline mixed with 10 percent ethanol with “e15,” containing 15 percent ethanol.

Unintended Consequences

The RFS was ostensibly designed to produce cleaner car emissions and decrease America’s dependence on foreign oil. Sounds good—but not in practice. Environmentalists complain that the side effects of ramped up corn and ethanol distillation have more negatives than positives. And the quota is actually driving up the price of many basic consumer goods and undermining economic recovery. The EPA shouldn’t strengthen RFS — it should rescind it.

The chief ingredient in ethanol is corn. America is the Saudi Arabia of corn, growing 40 percent of the world’s supply. Last year alone, the Standard diverted 40 percent of all U.S. corn towards ethanol production. This massive market reallocation in such a short time has led to drastic price increases in all corn-based goods, from cereals to ethanol itself. What’s more, thousands of barrels of ethanol are now going unused in the nation’s Corn Belt, thanks to government mandates that required ethanol production regardless of market forces. There’s such a surplus that fully 10 percent of the nation’s ethanol plants stopped production in the past year.

Even the Nebraska Ethanol Board has soured on its home team. “It’s a more somber mood,” says Todd Sneller, the board’s administrator. He thinks growth opportunities still exist “in theory,” but the reality is that it will take “an awful lot of time, money and political battles” to realize them.

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The spread peaked at $0.41 per gallon in November, although this peak is partially attributed to Hurricane Sandy. The spread began to collapse in mid2February with improvements in the Northeastern supply chain and temporary refining issues in the Gulf Coast. The spread currently sits at a more ‘normal’ level of about $0.05 per gallon. However, it is far from certain that this calm will persist given the upcoming summer driving season, the tenuous supply situation in the Atlantic Basin (U.S. East Coast and Europe), and several regulatory hurdles which are emerging as serious barriers to the supply of refined products in the United States.

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Democrat Ron Wyden of Oregon said the panel plans to spend "a lot of time" examining the nation's renewable fuel mandate, especially as it relates to the gasoline costs Americans pay at the pump.

"I'm not convinced that the current requirements are achievable," Wyden said at a policy event sponsored by the law firm Arent Fox and the Georgetown Public Policy Institute.

Wyden's comments came as lawmakers spar over the future of the once widely popular ethanol mandate, which was enacted with bipartisan support during the George W. Bush administration to help wean the United States off foreign oil.

The Renewable Fuel Standard requires the increased use of ethanol and biodiesel in the U.S. fuel supply, hitting 36 billion gallons of biofuels in 2022 from a base of 9 billion gallons in 2008.

It has helped create of a large ethanol industry, located mostly in major corn producing states.

But with U.S. oil output booming in recent years and gasoline demand falling on increasing vehicle efficiency, the biofuel targets have come under fire from lawmakers who say they are an unnecessary intervention in the free market and are pushing up food prices.

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Amanda Peterka, April 9- 

The measure would revise the overall RFS target to 21 billion gallons of biofuels by 2022 and waive any advanced biofuel requirements before the beginning of next year, according to a draft obtained by E&E Daily. It would also cap ethanol allowed in gasoline at 10 percent.

Virginia Republican Bob Goodlatte plans to introduce the bill today at an afternoon news conference. Reps. Steve Womack (R-Ark.), Jim Costa (D-Calif.) and Peter Welch (D-Vt.) are original co-sponsors.

The 2007 RFS requires 36 billion gallons of biofuels to be blended into the nation's motor fuel supply by 2022. EPA sets yearly RFS targets for both conventional ethanol and advanced biofuels; this year, refiners are required to blend 13.8 billion gallons of corn ethanol and a proposed 2.75 billion ethanol-equivalent gallons of advanced fuels.

EPA has proposed that 14 million ethanol-equivalent gallons must come from cellulosic sources, or plant-based materials such as agricultural residues, switchgrass and municipal solid waste.

RFS proponents say the standard is needed to reduce U.S. dependence on oil and build up the domestic advanced biofuels industry. The RFS has come under fire in recent months from a strange-bedfellow coalition of oil, auto, livestock and environmental interest groups that argue the standard isn't relevant under today's market conditions.

The Goodlatte legislation represents the most sweeping attempt at RFS reform this year. It incorporates several measures that other lawmakers have introduced already this Congress.

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The U.S. renewable fuel standard requires fuel producers to blend a certain portion of biofuels with gasoline; the standard originated under the Clean Air Act and was expanded under the Energy Independence and Security Act (EISA) of 2007.

The law divides biofuels into advanced and non-advanced, the latter comprising mass-produced U.S. corn ethanol.

Refiners have the choice either to blend the mandated quantity of each type of biofuel, or else buy compliance credits called Renewable Identification Numbers (RINs) which biofuel producers earn per gallon of manufactured fuel.

The trouble with cellulosic biofuel, made from woody fibre and classed as advanced biofuel, is that production is still in a test phase with negligible commercial sales.

EPA can downgrade the cellulosic biofuel target where output is expected to fall short, but it has still, perplexingly, consistently over-estimated volumes.

It seems plausible that EPA wants to provide an extra support for cellulosic ethanol producers by driving demand for cellulosic biofuel RINs from refiners.

The over-estimate only inflicts a small penalty on the U.S. refining industry (less than $5 million in 2011), but more importantly it adds to the impression of a policy lagging reality, where the separate corn ethanol mandate is on the cusp of exceeding distribution capacity at filling stations.

That so-called blend wall has been blamed for driving up gasoline prices.

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WKRG News 5

Ashley Knight, April 8- Corn--experts found a way to help decrease our dependency on foreign oil…and it's something we can grow in our own backyard. However, there have been concerns and the Internet is littered with articles talking about its negative effects on engines. University of South Alabama's Dean of the College of Engineering, Dr. John Steadman says ethanol does affect certain engine parts.

"Things like fuel lines, rings and those things that may be affected by having a strong chemical solvent," says Steadman.

Ethanol is a type of alcohol solvent, meaning it can eat through engine parts like rubbers, plastic, and certain kinds of fiberglass. Rubber used in seals and hoses may shrink. But Steadman says complications are rare and usually arise in a higher concentration.

"If you use regular 10% ethanol I think that the research indicates that you do not have any real difference. But if you had a large amount of alcohol, then you might very well find deterioration in things like the fuel lines."

If there is damage in car engines, it is usually in the older model cars, made in 1985 and before, who don't have engines made to tolerate the fuel.

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Michael Levi, April 1- 

The basics of what’s happening are broadly agreed. There is controversy over whether large numbers of U.S. cars can safely use fuel that contains more than 10 percent ethanol. For all practical purposes, then, refiners and blenders don’t want to use more than 10 percent ethanol in the fuel they produce. Meanwhile, the RFS2 is mandating increasing use of ethanol – and, because of high gasoline prices and improving fuel economy, total U.S. fuel consumption is falling at the same time. This squeeze from both sides means that the United States has hit the “blend wall” – the point at which it can’t use any more ethanol without breaching the 10 percent threshold – far earlier than anyone expected. It is impossible to comply with the volume requirements of RFS2 and avoid the blend wall at the same time.

For the time being, though, there’s a way out. In years when ethanol producers make more ethanol than the mandate requires, they generate a surplus of something called Renewable Identification Numbers, or RINs. They can bank those for the next year. Before 2012, when ethanol subsidies stopped, producers built up a surplus of RINs; part of that surplus remains. Blenders and refiners can buy these RINs instead of actually blending ethanol into their fuel. That’s how they’re dealing with the current crunch: they’re buying RINs instead of blending the full mandated volume of ethanol. The problem is that there’s a limited supply of RINs, so prices for them have skyrocketed. It’s those super-high RIN prices that people are now blaming for higher prices at the pump.

The big question is this: How much are high RIN prices actually inflating fuel prices? And how might that impact evolve? The new industry association paper claims that the impact is tiny, and that, once you factor in the relatively low price of ethanol, RFS2 is still producing net benefits for consumers. But their analysis doesn’t hold up.

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This week, National Journal’s Amy Harder of the asked experts to share their thoughts on the Renewable Fuel Standard (RFS)— “Defend, Revisit or Repeal.”  The majority of responses argue that the RFS is not working. Below are some of the noteworthy responses:

• “Many of the solutions proposed to free America from its dependence on oil—like more home-grown biofuels—are well-intentioned but ultimately harmful and simply unnecessary.” -Janet Larsen, Director of Research, Earth Policy Institute
   
• “While the intent was noble, the legislation has failed to live up to original expectations, and is having numerous unintended consequences, including higher food prices for consumers. Meeting the RFS mandates is not possible today, and meeting the scheduled increase in mandates will not be attainable in future years. It is time for a major overhaul of the Renewable Fuel Standard to match market realities.” -Bill Lapp, President, Advanced Economic Solutions
   
• “The Renewable Fuel Standard is a broken policy that must be repealed…America’s petroleum refiners – our members – support a sensible and workable integration of biofuels into the marketplace. However, a government mandate that sets aside free market principles introduces more problems than it solves.” –Charles Drevna, President, American Fuel and Petrochemicals Manufacturers
   

• “Thanks to an unworkable federal energy policy, prices for animal feed continue to soar, burdening those farmers and ranchers that raise livestock and poultry and the companies that process them with rising production costs. In addition to forcing farms and food producers to cut jobs or close their doors, the increased costs are reflected in the expanding grocery bills of every American, at a time when 46 million live below the poverty line.
  
  The Renewable Fuel Standard is turning more and more of our nation’s corn crop into fuel, with disastrous effects.
  
  By mandating that all U.S. transportation fuel contain ethanol, the RFS guarantees massive demand for corn — a primary ethanol feedstock — pushing up prices of the grain by an astronomical 275 percent since the policy went into effect in 2006.” -Mike Brown, President, National Chicken Council

• “Congress should repeal the Renewable Fuel Standard. The RFS was based on three key and ultimately flawed premises—a belief that the United States is running out of oil, that ethanol was a new and novel fuel that could become cost-effective with a little push from the federal government, and that ethanol would obviously reduce greenhouse gas emissions. All of these premises have been shown to be wrong. Worse, the RFS now increases the cost of food and fuel.” -Daniel Simmons, Director of Regulatory and State Affairs, IER
   
• “One of the consequences of the RFS mandate has been to divert corn and grain production from food production and feedstock use. This has led to corn and grain based food products being more expensive. The trickle-down effect of higher food prices is especially harmful to people living in developing countries where corn and grain products are basic food staples. Using food meant for the malnourished as a trade-off for enriching special interests should be a source a shame. It is unfortunate that it isn’t.
  
  There is only one course of action regarding the RFS: junk it!” -William O'Keefe, CEO, George C. Marshall Institute

• “Congress should eliminate all fuel mandates and subsidies. They harm the environment, consumers, and taxpayers, discourage innovation, and encouraging political rent-seeking.” -Susan Dudley, Director, George Washington University Regulatory Studies Center
   
• “The sooner that Congress enacts legislation phasing out the RFS, the better it will be for just about everybody.” -Michael Canes, Distinguished Fellow, LMI

Trouble Brewing

In a news article published in Science magazine last week, journalist Robert Service writes: “This year is shaping up to be decisive for ‘cellulosic’ ethanol made from corn stalks and other agricultural waste, as oil companies and the ethanol industry clash over government mandates for the automotive fuel.”

What’s going on? Let’s start with a brief primer on the use of ethanol in America’s automobile.

As a libation, ethanol’s been around for a long, long time. As a fuel, it dates back to 1826 when it was first used in an internal combustion engine. Ethanol was also the fuel that ran the 1908 version of the Ford Model T. But “the decreasing cost of oil (and US prohibition)” among other factors turned Ford’s “fuel of the future” into a fuel of the past and, with the exception of World War II [pdf], there it remained for much of the mid-20th century where the fuel of choice on America’s roadways was ethanol-free gasoline.

Congress’s Love Affair With Ethanol

Starting in the late 1970s, however, ethanol began to creep its way back into our fuel tanks, at first in response to oil shortages [pdf] and the Clean Air Act’s mandated phase-out of leaded gasoline (ethanol supplanted lead as an additive to enhance octane). Demand for ethanol increased as Congress began actively encouraging and then mandating its use in cars. For example, a 1978 tax break for ethanol-blended gasoline was followed by the 1990 Clean Air Act Amendments, whose requirements included the presence of an oxygenated compound such as ethanol in gasoline to produce cleaner automobile emissions and thus cleaner air.

More recently, Congress upped the ethanol ante with two renewable fuel standards: the 2005 Energy Policy Act “required 7.5 billion gallons of renewable fuel to be blended into gasoline by 2012” and the Energy Independence and Security Act of 2007 greatly expanded the program by:

• increasing the volume of renewable fuels from 9 billion gallons in 2008 to 36 billion gallons by 2022,
• adding more renewable fuel categories each with separate volume requirements (including cellulosic ethanol targets of 100 million gallons in 2010 increasing to 16 billion gallons in 2022), and
• applying life cycle greenhouse gas performance threshold standards to ensure that each category of renewable fuel emits less greenhouse gas emissions than the petroleum fuel it replaces.

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David Shepardson, March 26- 

The Alliance of Automobile Manufacturers — which represents Detroit's Big Three automakers, Toyota Motor Corp., Volkswagen AG and others, the Association of Global Automakers — the trade association representing many major foreign automakers and the Outdoor Equipment Institute and the National Marine Manufacturers Association filed a petition late Monday asking the U.S. Supreme Court to overturn the D.C. Circuit Court of Appeals' August decision that none of the trade associations or parties had the legal standing to challenge approval of E15.

The groups are challenging the EPA's decision in early 2011 to grant partial waivers approving the sale of gasoline containing 15 percent ethanol for 2001 model year and newer passenger cars and light trucks.

"Automakers' greatest concern continues to be customers. It is critical that consumers have a positive experience with renewable fuels, which are an important component of our national energy security. It is not in the longer term interest of consumers, the government, and all parties involved to discover, after the fact, that equipment or performance problems are occurring because a new fuel was rushed into the national marketplace," the alliance said.

  Michael Stanton, president and CEO of Global Automakers, said the EPA's decision was incorrect and the higher ethanol blend will cause "potential harm to vehicles not designed or warranted for such use." He said the group supports the prospective use of alternative fuels, including ethanol.

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"Ethanol has inherent properties that can cause corrosion of metal parts, including carburetors, degradation of plastic and rubber components, harder starting, and reduced engine life," says Marv Klowak, global vice president of research and development for Briggs & Stratton, the largest manufacturer of small engines. "The higher the ethanol content, the more acute the effects." Servicing dealers are reporting similar problems, even with E10, according to the Outdoor Power Equipment Institute, the industry's trade group.

The OPEI also claims that proposed warnings at pumps are insufficient and that customers will blame equipment makers should mowers and other outdoor gear fail from being accidentally fueled with E15 gasoline. Using gasoline with more than the usual 10-percent ethanol has long voided most small-engine warranties but, until recently, the chance of doing so has been minimal.

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The highest ranking Republican and Democrat members of the House Energy and Commerce Committee late Wednesday released the first of a planned five white papers on fuel policy and sent a series of questions to groups on all sides of the issue. The influential committee is expected to hold hearings on the issue later this year, but so far none have been scheduled, a spokesman said Thursday.

"It has been more than five years since the RFS was last revised, and we now have a wealth of actual implementation experience with it," the bipartisan policy document states. "In some respects, the RFS has unfolded as expected, but in others it has not. Several implementation challenges have emerged that received little if any consideration prior to passage of the Energy Independence and Security Act of 2007. Furthermore, the overall energy landscape has changed since 2007. It is time to undertake an assessment of the RFS."

The Energy and Commerce Committee is the third major congressional group to raise the issue of the RFS.

Members of the Senate Environment and Public Works Committee and the Senate Energy and Natural Resources Committee have expressed concern over the rising cost of renewable fuel credits, known as RINs, that refiners use to show compliance with the RFS. Senator Ron Wyden, Democrat-Oregon, chairman of the Senate ENR, has said he will hold hearings later this year on rising gasoline prices, including an examination of the RINs issue.

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Charles Babbage, March 25- 

Ethanol in such quantities can certainly damage engines that are not equipped to handle it—as few are. The problem is that, unlike the hydrocarbons of pure petrol, ethanol has a special affinity for water from the atmosphere. The entrapped moisture can corrode petrol tanks, pumps, fuel lines and injectors. Only 3.6% of vehicles on the road in America are certified to use fuel containing higher blends of ethanol like E15 and E85 (15% and 85% ethanol, respectively).

Moreover, ethanol burned in an engine produces more than twice as much ozone as the equivalent amount of petrol. Ground-level ozone is a big cause of smog. And, while good at boosting a fuel’s octane rating, ethanol packs only two-thirds the energy per gallon of petrol. As a result, motorists get fewer miles per gallon using fuel blended with ethanol than with undiluted petrol. So, even if blended fuel is cheaper per gallon than petrol (thanks to ethanol's subsidies), the overall cost of using it tends to be higher.

The tussle between Big Oil and Big Corn has burst into the open because of the sudden surge in petrol prices—up 12% since the beginning of March. This has happened at a time when oil prices in general have been flat, or even in decline.

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Backed by government subsidies and mandates, hundreds of ethanol plants rose among the golden fields of the Corn Belt, bringing jobs and business to small towns, providing farmers with a new market for their crops and generating billions of dollars in revenue for the producers of this corn-based fuel blend.

Those days of promise and prosperity are vanishing.

Nearly 10 percent of the nation’s ethanol plants have stopped production over the past year, in part because the drought that has ravaged much of the nation’s crops pushed commodity prices so high that ethanol has become too expensive to produce.

A dip in gasoline consumption has compounded the industry’s problem by reducing the demand for ethanol.

The situation has left the fate of dozens of ethanol plants hanging in the balance and has unsettled communities that once prospered from this biofuel.

“It’s a more somber mood,” said Todd Sneller, the administrator of the Nebraska Ethanol Board. “The growth opportunity that existed some years ago is still out there in theory, but the reality that it’s going to take an awful lot of time, money and political battles to realize that opportunity” is causing consternation.

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This year, that mandate requires American refiners to use 13.8 billion gallons of corn ethanol – more than they can actually blend into their gasoline.

By contrast, fuel makers are expected to generate only a little more than 5 million gallons of non-food-based biofuels that could reduce greenhouse gas emissions. Many doubt whether the industry can hit this target.

Once heralded as a “bridge fuel” to advanced biofuels, corn ethanol has turned out to be a bridge to -- more corn ethanol.

That’s not just bad news for Americans worried about the greenhouse gas impact of the fuel they use. It’s also bad news for consumers worried about rising food prices. And it’s terrible news for the developing world, where corn ethanol has increased the cost of food imports by more than $6 billion in recent years. The U.S. Department of Agriculture warns that corn shortages – caused in part by the ethanol mandate – will drive up U.S, food prices by another 3 to 4 percent this year.

Corn ethanol has been a costly disaster for farmers, food manufacturers, restaurants and other food retailers. What’s more, it is increasing the price of gas. When you factor in the inconvenient truth that corn ethanol delivers two-thirds of the energy content of gasoline, ethanol is actually more expensive than gas per mile driven, according to the U.S. Energy Information Administration.

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Dan Dicker tells Jim Cramer how the ethanol program is destroying itself with by subsidizing foreign companies and spiking gas prices.

Below, we’ve contrasted their rhetoric with reality – check out the sources and then tell us, who should you trust? A Nobel-Prize Winner, the AAA, environmentalists, food producers, anti-hunger advocates and independent media? Or the lobby dedicated to preserving the artificial market for their product?

Sign up to demand change.

Rhetoric vs. Reality - Food Prices

Rhetoric vs. Reality - Engines

Rhetoric vs. Reality - Environment

Rhetoric vs. Reality - RFS Critics 

Click through and use the arrows to explore what some RFS critics are saying about ethanol. 

John M. DeCicco, March 12- 

These efforts come on the heels of pleas from 10 governors, nearly 200 members of Congress and diverse businesses groups from around the country calling for administrative waivers of ethanol requirements. However, these appeals have been largely denied by the EPA, which is holding to a strict interpretation of the stringent and expansive RFS mandate that Congress enacted in the Energy Independence and Security Act (EISA) of 2007.

With last year’s drought destroying much of the corn crop and forecasts of dangerously dry climatic conditions continuing, the downsides of an overly ambitious RFS are all too clear. To understand how we got here, some history is in order.

Renewable fuels such as ethanol and biodiesel were long hailed as alternatives to petroleum. These biofuels bolster corn and soybean farmers' incomes and claimed to protect the climate by recycling carbon from the air. As prices at the pump climbed over the previous decade, biofuel proponents lobbied to replace oil with home-grown biofuels. Some major environmental organizations — enthralled by the prospect of growing energy instead of drilling for it and lulled by lopsided studies touting biofuels' benefits — threw their weight behind the effort.

In response, Congress created the RFS in 2005 with an original target of seeing 7.5 billion gallons of ethanol blended into the fuel supply by 2012. That would have been a safe goal, one that could be met by blending ethanol at levels below the 10 percent limit compatible with most of the cars already on the road and millions of small gasoline engines in motorcycles, lawn and garden equipment, home generators, boats and many other items.

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March 11- 

This story dates to 2007 when the Bush Administration joined Democratic greens and corn-state Republicans to pass an energy bill mandating renewable fuel standards. The law required a 10% ethanol blend in all gasoline and established annual mandates for how much ethanol the oil and gas industry must purchase each year through 2022.

This year refiners and importers are required to blend 13.8 billion gallons of ethanol into the nation's gasoline, rising to 14.4 billion next year. The EPA allocates a share of this mandate to oil and gas companies, and to monitor compliance each gallon of ethanol is assigned a 38 digit Renewable Identification Number, or RIN.

The problem is that Washington's seers were wildly wrong about how much gas Americans would keep putting in their tanks. In 2007 annual gasoline consumption was about 140 billion gallons per year, with forecasts of rising demand. But the 2008-09 recession and better fuel economy have lowered consumption to an estimated 135 billion gallons.

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"The Oil Price Information Service recently described the market as 'RIN-Sanity'.

The US Renewable Fuel Standard, updated in 2007, requires blending 13.8bn gallons of corn-derived ethanol with petrol this year. But most forecourts sell petrol blends containing only 10 per cent ethanol, and with US petrol consumption projected to be flat at 134bn gallons this year, this translates into demand for 13.4bn gallons of ethanol — less than the mandate.
High corn prices and weak petrol demand have meanwhile forced some ethanol refiners to shut down plants. US ethanol production last week was running at an annual rate of about 12.3bn gallons, meaning insufficient domestic supply to meet the mandate."

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The credits, known as Renewable Identification Numbers, or RINs, have gained 1,400 per cent in 2013 as oil refiners and fuel wholesalers worry they will be unable to meet ethanol blending mandates with physical supply. The Oil Price Information Service recently described the market as “RIN-Sanity”.

Fuel suppliers and oil refiners can use excess RINs in lieu of selling physical barrels to satisfy biofuels mandates. The numbers are 38-digit codes generated when biofuels are produced.

The US Renewable Fuel Standard, updated in 2007, requires blending 13.8bn gallons of corn-derived ethanol with petrol this year. But most forecourts sell petrol blends containing only 10 per cent ethanol, and with US petrol consumption projected to be flat at 134bn gallons this year, this translates into demand for 13.4bn gallons of ethanol -- less than the mandate.

“The thresholds that were set for ethanol blending in 2013 are anachronistic,” said Tom Kloza, an OPIS analyst.

High corn prices and weak petrol demand have meanwhile forced some ethanol refiners to shut down plants. US ethanol production last week was running at an annual rate of about 12.3bn gallons, meaning insufficient domestic supply to meet the mandate.

Market participants say oil companies have been buying excess RINs from blenders and others to ensure compliance with the rules as the difference between mandated levels and actual renewable fuel widens.

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Ethanol producers are cherry-picking data to hide how the Renewable Fuel Standard is raising your family’s grocery bill. Here’s what they’re not telling you:

1. Increasing food prices are a continuing trend. Ethanol proponents argue food prices rose just 1.8% in 2012, the second-lowest annual rate in the last 20 years. First, consider that this number represents a 1.8% increase over 2011, which saw its own increase of 4.7%. That’s the third-highest increase in food prices we’ve seen since 1993. In fact, according to the Consumer Price Index (CPI) released by the Bureau of Labor Statistics, the 2012 increase represents the fifth-lowest increase over the past 20 years, not the second-lowest.
    
2. There is a clear link between the RFS and rising food costs. The three largest December-to-December increases in Food CPI over the last 20 years have all taken place since the RFS first went into effect in 2005:
   • 2008 = +5.9%
   • 2007 = +5.0%
   • 2011 = +4.7%
3. It’s more expensive than ever to produce food. The trend is clear: grocery prices are rising, but even these increases don’t reflect the rising cost of food production. Food producers are operating in a competitive market, so they’re forced to compress margins to keep customers. In 2012, the Producer Price Index for finished consumer food, which shows how much it costs producers to actually make food, was 2.3%. That’s the eighth-largest increase in the last 20 years. Again, we need to consider this in the context of 2011, which saw the third-highest price increase for food production over the past 20 years at 6.0%.

The amount of corn required to produce the ethanol in one gallon of gas could feed a person for an entire day. Linking the ethanol mandate to rising food prices isn’t alarmist rhetoric; it’s an accurate analysis of the facts. The ethanol industry wants you to believe that using 40% of America’s corn for fuel instead of food doesn’t raise food prices. Here are just a few organizations who vigorously disagree with that assertion:

That’s right. Dozens of organizations representing the people responsible for producing America’s food are standing against the RFS. Will you join them? Demand change. Sign our pledge to demand a smarter solution, a Smarter Fuel Future.

Why is the nation’s largest retailer struggling so much? In today’s Wall Street Journal, Forbes publisher Rich Karlgaard notes the retailer’s sales problems and points to a couple of reasons why the company is having so much trouble. The expiration of the payroll tax cut, which for the last few years has reduced take home pay levels by about $80 per month for families making $50,000 annually, is probably one factor. But Karlgaard also points to the role of food price inflation:

"Food prices are rising faster than overall inflation. Inflation is the great hidden tax, especially when it hits essentials like food. Core inflation is running at about 2%, but the U.S. Department of Agriculture predicts that food prices will be up 3%-4% in 2013. This will nip at Wal-Mart customers and Wal-Mart itself, which now gets half of its U.S. revenue from groceries. Will Wal-Mart eat the inflation and hurt its profit, or will it pass it onto its customers and risk driving them away? Food inflation presents no good choices."

Food price inflation is indeed complex, and there’s no simple way to prevent it. But there is a single step that government could take that would almost certainly significantly arrest the rapid rise in the cost of food: end ethanol energy mandates.

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I learned that the chemical energy added to soil by intensive ammonia-based fertilization has been directly responsible for increasing Iowa corn yields by a factor of 6 since the 1930s. It was a little depressing to find out that that adding hydrogen from natural gas to upgrade carbohydrates to useful liquid fuel releases 11 tons of CO2 for every ton of hydrogen added to the fuel and that the process is absolutely required to make biofuel compatible with the military fuel supply system.

There is also an important passage about the Dynamic Energy Budget theory and why it highlights the importance of Energy Return on Investment (EROI) for both organisms and for society as a complex organism that requires energy to function.

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HB 4001 by Rep. Matt Gaetz, R-Shalimar, would repeal the requirement passed in 2008 as part of an energy bill championed by then-Gov. Charlie Crist.

Gaetz last year proposed repealing the requirement but said Tuesday he settled on a "faux compromise" that made it clearer in state law that the sale of gasoline without ethanol is legal for use in boats, small motors, antique cars and other purposes.

Gaetz told the House Energy & Utilities Subcommittee that HB 4001 this year is needed because ethanol is harmful to some engines, increases gas prices, increases food and grain prices, is bad for the environment because its production uses water and creates greenhouse gases.

He said the state ethanol requirement "tries to dictate consumer behavior." And he said the energy market since last year has changed with huge shale oil reserves being discovered in the United States.

"All the investment in energy that is occurring today is occurring to refine and transport the massive amounts of cheap energy that exists in the Midwest," Gaetz said.

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It’s a big transformation in the heart of the country: The authors conclude that the rates of grassland loss are “comparable to deforestation rates in Brazil, Malaysia, and Indonesia.” And those changes are already having plenty of impacts.

For one, farmers are now growing crops on increasingly marginal land. In Nebraska, North Dakota and South Dakota, corn and soy are planted in areas that are especially vulnerable to drought. But farmers take the risk because corn and soy have become so lucrative — and, in part, because the federal government offers subsidized crop insurance in case of failure. (The study also finds evidence that many farmers are no longer enticed by federal conservation programs that pay for grassland cover.)

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This paper presents a physical evaluation of key characteristics of liquid transportation fuels and highlights the deficiencies that preclude biomass from becoming a primary energy source and biofuels from replacing petroleum as a national-scale transportation fuel.  These factors include petroleum-dependence, energy return on investment (EROI), energy density, power density, water footprint, food competition, environmental damage, land confiscation, and lifecycle greenhouse gas (GHG) emissions.  This paper argues that biofuels do more to harm the causes of national and global security than to help them.

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“The fact that EPA would allow a fuel in the marketplace that it knows will  threaten existing engines and refueling infrastructure is inconceivable and is a glaring example of EPA’s willingness to place politics ahead of science,” said AFPM President Charles T. Drevna. 

E15 is a blend of fuel containing 15 percent volume ethanol and 85 percent volume gasoline. While E10 has been proven to be a safe and reliable gasoline for more than 20 years, the same cannot be said about E15. Despite this reality, EPA approved E15 for sale into the general gasoline pool for vehicles made in and after 2001.

Numerous studies show that gasoline blends containing more than 10 percent ethanol can cause engine damage in millions of vehicles on the road today and in smaller engines including chainsaws, lawnmowers, boats and snowmobiles. As a result, vehicle manufacturers have warned that the use of E15 will void warranties, leaving consumers vulnerable to expensive repair bills.  

“EPA chose to prematurely issue a series of fuel waivers to allow E15 to be used in vehicles manufactured after 2001, despite compelling evidence that the fuel will be costly and potentially dangerous for consumers,” said Drevna.

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The survey also found that several service stations selling the fuel blended with 15 percent ethanol were not registered, as required by the Renewable Fuel Standard, the Environmental Protection Agency mandate that calls for an overall reduction in the fuel supply through the use of biofuels.

“After the gas stations were surveyed, it turned out six of those sites had not even put a basic warning label on the pump,” Squires told Soundings Trade Only. “That’s very concerning to us. Even with all the scrutiny on E15 these sellers didn’t bother to even label the pump.”

One of the conditions stations must adhere to in order to sell E15 is to sign up to have a survey of their operations performed.

“It’s part of the EPA’s effort to make sure they’re fulfilling the mandates they’ve put forward,” Squires said.

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In 2007, Congress and President Bush passed a law mandating fantastically large volumes of cellulosic ethanol. For example, for 2013 the law requires refiners to buy 1 billion gallons of cellulosic ethanol. But Congress understood that reality might not match their expectations and authorized the EPA to annually consult with the Energy Information Administration to project the amount of cellulosic ethanol that will be produced the next year. The EPA's projection would then be the mandated amount of cellulosic ethanol.

The EPA's projections have been out of whack with reality and because oil refineries are required to buy this phantom fuel or purchase credit (in effect a tax), the refiners took the EPA to court for skewing its projections in favor of cellulosic ethanol producers to the detriment of refineries and gasoline-buying Americans.

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In a presentation at The Heritage Foundation, Dr. Yaneer Bar-Yam elaborated upon earlier research done by NECSI demonstrating a link between global food price increases associated with the corn-to-ethanol conversion and violence in the Middle East and North Africa known as the “Arab Spring” causing “unrest and upheaval.”

“[Corn] is a huge part of the global food system,” Bar-Yam said. Corn forms the basis for everything from high fructose corn syrup and cereal to feed for livestock.

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"Somebody has to demonstrate some interest" in FFVs in the US before General Motors will boost its offerings of those vehicles like it has in Brazil, said Coleman Jones, biofuel implementation manager with the company, at the Renewable Fuels Association's annual conference in Las Vegas.

Coleman also noted automakers need "confidence" that significant ethanol will be available for the vehicles. He cited the drought last year that forced ethanol plant shutdowns and production curtailments.

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The oil industry, environmentalists, taxpayer groups, livestock growers and foreign aid groups all want Congress to repeal the mandate requiring a 15 percent blend of ethanol in gasoline.

More than 40 percent of the U.S. corn crop goes to ethanol, combining with a continuing Midwest drought to drive up corn prices. In a conference call Monday, refiners said it wrecks everything from car engines to outboard motors to chain saws.

Scott Faber, a lobbyist for Environmental Working Group, said ethanol has destroyed more wetlands and grasslands in the last four years than were wrecked in the last 40 and as far as greenhouse gasses go, it is “worse than the Canadian tar sands.”

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“AFPM is grateful to the bills’ sponsors for recognizing that this nonsensical mandate forces refiners to pay for fuels that do not exist,” said American Fuel & Petrochemical Manufacturers President Charles T. Drevna. 

Under the current RFS program, EPA is required to set the annual cellulosic biofuel standard based on the projected production for the following year. Rather than using the previous year’s attained production level as the basis for a new and achievable mandate, the Agency instead relies upon the unrealistic predictions of cellulosic biofuel producers resulting in unachievable mandates that harm consumers. 

Despite three successive years of aggressive mandates, zero gallons of cellulosic biofuels were produced in 2010 and 2011, and only 1,741 gallons in 2012. Yet the Agency continues to mandate millions of gallons, essentially forcing refiners to write EPA a check to comply with a mandate they would otherwise be unable to meet.

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The assembled groups are asking Congress to revise — or completely repeal — the eight-year-old renewable fuel standard that requires refiners to blend steadily increasing amounts of ethanol and other alternatives — up to 36 billion gallons in 2022 — into the nation’s transportation fuel supply.

“It’s pretty emblematic of the problem with this whole renewable fuel standard that you have such a disparate group of people all saying that … the RFS is unrealistic and impractical to the point that it should be repealed by Congress,” said Charlie Drevna, the head of American Fuel and Petrochemicals Manufacturers.

Drevna’s refiners group was joined by ActionAid, the Environmental Working Group, FarmEcon, the National Marine Manufacturers Association and Taxpayers for Common Sense in arguing for changes to the renewable fuel standard on Monday. The groups plan to make their pitch to lawmakers and their aides on Capitol Hill on Tuesday.

The groups are part of an increasingly vigorous push against the RFS, led by the oil industry as it hits the so-called “blend wall,” the practical ceiling on how much biofuel can be blended into the nation’s gasoline, given a 10 percent limit on the amount of ethanol in the most commonly available transportation fuel.

A federal appeals court in Washington, D.C., last month spiked the Environmental Protection Agency’s 2010 requirement under the RFS for refiners to blend in 8.65 million gallons of cellulosic biofuels made from grasses, solid waste and other non-edible material, after concluding it was unrealistic. Because virtually no cellulosic biofuels have been available for sale, refiners have had to buy waiver credits from the EPA — at a rate of 78 cents per gallon — to comply with the mandate.

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You can find remarks from the following groups below:

Action Aid
Tom Elam, president, FarmEcon, LLC (on behalf of the National Turkey Federation and National Chicken Council)
National Marine Manufacturers Association

And on Feb. 5, many of these same groups hosted Capitol Hill briefings on “The Renewable Fuels Standard: Pitfalls, Challenges, and the Need for Congressional Action in 2013.” Please see below for handout materials available at the briefings.

“Fueling The Food Crisis: The Cost to Developing Countries of US Corn Ethanol Expansion,” ActionAid
“American Frozen Food Institute Urges Congressional Action on Renewable Fuel Standard,” American Frozen Food Institute
“The Renewable Fuel Standard: Real Costs, and Need for Reform,” Dr. Thomas Elam, FarmEcon, LLC
“The EPA vs. State Economies,” Marlo Lewis, Competitive Enterprise Institute
The Price is Wrong (infographic)
Biofuels & the Environment (infographic)
The Real Cost of E15 (infographic)
Food for Thought (infographic)

There is a reason I don’t ride a unicorn to work.

It isn’t because it’s too far to work. Nor is it because it rains here in Hawaii nearly every day and I might get wet. It isn’t because the powerful automobile lobby has convinced me that driving a car to work is a better option for me. No, it’s a bit more fundamental than that.

I don’t ride a unicorn to work because unicorns don’t exist.

But imagine the following scenario. A number of companies claim that they are developing unicorns, and in 3 years they will be commercially available. The Environmental Protection Agency (EPA) thinks “Hey, this is a great idea. It would be a more environmentally friendly method of transport. Let’s force automakers to start selling these unicorns in 3 years. We will base our projections on how many unicorns these unicorn companies say they will produce. After that we will increase the number the automakers must sell in each subsequent year, and then force the automakers to pay up if they don’t meet these quotas.”

Now imagine that the unicorn companies fail to produce the unicorns, and instead of waiving the unicorn mandate the EPA merely reduces the number of unicorns that the automakers must sell. The unicorn companies that over-promised get a free pass on their inflated claims, while the automakers are still penalized for not selling enough non-existent unicorns.

Cellulosic Ethanol Mandate

Consumers are at least scientifically literate enough to recognize the absurdity of this scenario. Even if they hate the auto industry, they understand that since unicorns don’t exist it would be unfair to punish the auto industry for not selling them. But replace the auto industry in this scenario with the oil industry, and unicorns with cellulosic ethanol — and this is an accurate description of what the EPA did.

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The American Petroleum Institute cast the report by the non-profit Coordinating Research Council as fresh evidence that the Environmental Protection Agency should rescind its 2010 decision to approve the sale of the so-called “E15″ blend for 2001 and newer automobiles. A previous study by the Coordinating Research Council, which counts API as a sustaining member, linked engine durability problems to E15.

“These results, when coupled with the CRC engine durability study . . . show millions upon millions of consumer vehicles could be adversely impacted with E15,” said Bob Greco, API’s downstream group director. “The more we study, unfortunately, the more issues we uncover.”

But ethanol backers swiftly criticized the new study’s design, calling it flawed for relying on car components tested in isolation with E15 as well as an “aggressive” E15 blend that included more water and acid than what most motorists actually would pump from filling stations.

Tom Buis, the CEO of Growth Energy, said the research could “at best be described as incomplete and cherry picking.”

“This is a classic example of he who pays the piper calls the tune,” Buis said. “Oil companies are desperate to prevent the use of higher blends of renewable fuels (and) have erected every regulatory and legal roadblock imaginable to prevent our nation from reducing our dependence on oil.”

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Three slides in particular are noteworthy.

Slide no. 19 projects that even in 2040, the quantity of biofuel in the U.S. motor fuel market will be about 10 billion gallons lower than the 36 billion gallons per year required by the Renewable Fuel Standard (RFS) by 2022.

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Elizabeth Harball, Jan. 28- 

At a biofuels energy symposium hosted by the Institute of Medicine of the National Academies last week in Washington, D.C., professor Jerald Schnoor said corn ethanol production facilities require large quantities of high-purity water during the fermentation process.

This water is obtained from underground aquifers, and as ethanol production reaches a fever pitch in Iowa, the state's water supply is threatened. Even in 2009, Iowa state geologists warned that the Jordan aquifer was being pumped at an unsustainable rate in several counties, exceeding the state's 1975 base line within the next two decades.

"We're near record devotion of acres to corn right now," said Schnoor, who also headed the Iowa Climate Change Advisory Council in 2007. Up to 40 percent of corn production in the United States now goes to ethanol fuel. Schnoor estimated that up to three-quarters of corn crops in his home state are devoted to ethanol production, stressing Iowa's groundwater sources.

He cited the Lincolnway Energy Plant in Nevada, Iowa, as an example. This plant, which Schnoor acknowledged was older and less efficient than newer plants, produces 50 million gallons of ethanol every year by processing 100,000 acres of corn. He said this process requires 200 million gallons of water per year.

Read more >>

Editor's note: To learn more, check out our Infographic on Biofuels and the Environment. 

Editor's note: Original attribution to Scientific America has been changed to Climate Wire on 2/1.

While the Court acknowledged that the purpose of the RFS program was to 'increase the production of clean renewable fuels,' it rejected EPA’s argument that an aggressive cellulosic mandate was needed to force new technology into the marketplace and held that 'refiners are in no position to ensure, or even contribute to, growth in the cellulosic biofuel industry.' In a win for consumers, the court rejected EPA’s philosophy of 'Do a good job, cellulosic fuel producers. If you fail, we’ll fine your customers.'

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The warning comes in a report by a new coalition of charities and faith groups backed by figures such as Bill Gates, the Microsoft founder, and the South African Nobel Peace Prize winner Desmond Tutu.

The “If” campaign, which is being launched today, aims to put pressure on David Cameron to use Britain’s presidency of the G8 to tackle the causes of hunger in the developing world.

The coalition, whose leaders include the film director Richard Curtis, has brought together charities such as Oxfam, Save the Children and the Catholic development agency Cafod with the Church of England, as well as Muslim and Jewish groups.

It points out that there would be enough food to feed everyone in the world – if certain barriers are overcome.

The group is calling for more aid to be targeted towards those most at risk of huger and curbs on “tax dodging” by companies operating in the developing world.

Other targets include the rise of biofuels, which it argues lies behind a series of legal “land grabs” which have swept poor farmers, many of them women, aside.

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Most popular analyses conveniently disregard the carbon footprint inherent with growing corn. Tractors used to plow, disk and fertilize; combines used to harvest; and trucks used to transport corn to granaries, ethanol and gas refineries and, finally, gasoline stations all require copious amounts of fossil fuels. Michigan farmers know well that pressure to increase crop yields depletes the soil of important nutrients, resulting in increased fertilizer use. That, in turn, impacts Michigan’s waterways as the likelihood of runoff creates severe algae blooms that cause stream and river eutrophication.

Congress wisely ended the $6 billion per year Volumetric Ethanol Excise Tax Credit after forcing taxpayers to foot an estimated $45 billion in ethanol subsidies since 1980, and further allowed the ethanol import tariff to expire at the end of 2011. The federal subsidies amounted to 45 cents per gallon for ethanol blenders, and shielded the American ethanol industry from competition with a tariff of 54 cents per gallon on foreign imports.

Unfortunately, although the subsidies are gone, the federal mandates remain. The 2007 Renewable Fuels Standard, signed by President George W. Bush, still requires that all U.S. fuel contain a blend of 10 percent ethanol, resulting in 44 percent of all corn grown in the United States being, pardon the pun, earmarked for ethanol production. This percentage represents an estimated 15 percent of all corn grown in the world.

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Among all the problems that have surfaced as a result of using ethanol as an alternative to gasoline, one is especially troubling. It can damage automobile engines and fuel systems.

The Environmental Protection Agency’s (EPA) case for E15, a fuel blend consisting of 15 percent ethanol and 85 percent gasoline, has completely fallen apart, as evidenced by the recent report from the American Automobile Association (AAA) that E15 can cause accelerated engine wear and failure, resulting in costly repairs for unsuspecting consumers.

The AAA’s report has again raised the question of whether Congress should roll back the mandate requiring escalating production of ethanol, mainly from corn. The answer is, increasingly, yes.

The Renewable Fuel Standard, which Congress enacted in 2005, originally projected that by 2010 the advanced biofuels industry would have taken off. But that has not happened due to many economic and technological barriers that severely limited ethanol’s effectiveness as a fuel.

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Established by Congress in 2005, expanded in 2007 and administered by the Environmental Protection Agency, the RFS mandates require blending of large quantities of ethanol into the nation's fuel supply. The RFS is not only failing miserably to achieve its goal of reducing greenhouse gas emissions, but it is also appropriating 40 percent of the U.S. corn crop for fuel use, cutting drastically into the supply needed for animal feed.

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Corn tortillas, the daily bread of your average Central American, have become more costly, along with other staples such as eggs. The blame is being put on recent policies by the U.S. and Europe which require that biofuels, or fuels using renewable resources such as corn and sugar, be blended into the nation's fuel supply. Biofuel mandates are usually seen as environmentally friendly measures as they reduce carbon dioxide emissions, but in our increasingly connected world, there are often unforeseen effects on nations, communities and individuals around the globe.

A Guatemalan three years ago could pay one quetzal, the equivalent of about 15 cents, and receive eight tortillas; one quetzal now purchases half that amount. Because chickens eat corn feed, their eggs have also become expensive – three times more expensive than they used to be.

"The average Guatemalan is now hungrier because of biofuel development," says Katja Winkler, a researcher at Idear, a Guatemalan nonprofit institute for agricultural and rural studies. According to the United Nations, about 50 percent of Guatemala's children are malnourished, and in the 2012 Global Hunger Index Report put out by International Food Policy Research Institute, Guatemala is the only country in Central America labeled "serious." Other countries in the region are categorized as only being "low" or "moderate" regarding hunger.

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The problem is that EPA cannot forecast the amount of cellulosic ethanol correctly—or even closely. Further, EPA is likely to order an increased amount be purchased regardless of past failures – King Canute-like — in the hope that their mandated levels will mysteriously appear in the U.S. market

Lest anyone only blame EPA for gross forecasting incompetence, a Democratic Congress led by Speaker Nancy Pelosi and Senate Majority Leader Harry Reid joined forces with Republican President George W. Bush to give EPA the authority to do this in the Energy Independence and Security Act of 2007 that mandated specific levels of biofuels be produced, both from corn and from cellulosic materials such as corn husks and other crop waste, wood chips, switch grass, poplar, and other energy crops.

Through the first 10 months of 2012, EPA reports that 20,069 gallons of cellulosic ethanol were produced[i]. The problem, however, is that EPA forecast 431 times that amount (8.65 million gallons) would be produced. Further, all of the 20,069 gallons was exported.[ii] While EPA has not yet released its 2013 mandated level, the Energy Information Administration (EIA) has provided its input to EPA, suggesting that 9.6 million gallons will be produced in 2013. EIA provides its forecast to EPA each October, as required, and it has always been a lower amount than EPA’s mandate. However, neither agency has yet been able to predict the amount correctly. In fact, the closest EPA has even come to correctly forecasting the amount of cellulosic ethanol produced was in 2010 when zero cellulosic ethanol was produced and EPA estimated that 5 million gallons would be produced.

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In 2007, Congress passed an expanded Renewable Fuel Standard, or RFS, which mandates that large quantities of biofuel– made from corn and other biomass—be blended into the fuel supply each year. Lawmakers promised that this policy of turning food and plants into fuel would be a silver bullet for America’s energy challenges—making us more energy secure and more environmentally friendly.

Sound too good to be true?

It is. Seven years later, the RFS has not only failed to achieve its stated objectives – it’s also hurting every American at the grocery store and the gas station.

Numerous research organizations, academic institutions and public interest groups have all spoken out to voice concern about the negative economic, environmental, food and engine performance effects of current U.S. biofuel policy.

There is a smarter solution. We’re calling on lawmakers to revisit the failed Renewable Fuel Standard (RFS) and enact policies that take our collective concerns into account.

Americans deserve a policy framework where:

• Goals and outcomes are informed by markets, not mandates
• Our natural resources are used strategically and efficiently
• America’s crops and cropland are dedicated to providing food and feed, not fuel
• Consumers’ right to safety and value come first
• The success of policies and programs are evaluated on real-world performance, and are not vulnerable to fraud and manipulation

Watch the video above and ask yourself, "Is the RFS really working for America?" If you agree the answer is "no," sign our pledge to demand change.

The nation's largest motor club says use of the fuel blend, E15, could void car warranties on most cars. More corrosive than traditional gasoline, some studies show E15 may accelerate wear and tear on engines and components.

Federal agencies are pushing E15 as one component of a broader energy policy that promotes alternative fuels as a way to wean the country away from its reliance on foreign oil. The fiscal cliff bills extends a tax credit that makes it easier for gas stations to install E15 pumps and storage tanks. Experts say they think this will accelerate the arrival of E15 across the nation.

"Our concern is when you look through some of the research out there, you say, 'Boy, if this is half right, we should really be concerned,' " said John Nielsen, AAA's director of automotive engineering and repair.

Chrysler, Nissan, Toyota, Volkswagen and BMW have all stated their warranties do not cover damages related to use of E15. Eight other automakers tell AAA they may cancel warranty coverage, depending on what needs to be repaired.

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The state agency is at work on a bill that would ban such gasoline blends in Maine if at least two other New England states go along with the prohibition. The legislation is not yet written, and the department is still working on final details.

The move comes amid concerns about E15 — a gasoline blend with 15 percent ethanol — voiced in recent months by the American Automobile Association, boaters, small engine operators, fuel dealers and others that most cars on U.S. roads and most small engines aren’t equipped to handle the more ethanol-heavy blend.

The U.S. Environmental Protection Agency started allowing the sale of the 15 percent ethanol blend in June 2012. And while it’s only available at 10 gas stations in Iowa, Kansas and Nebraska, the ethanol industry is aggressively marketing the E15 blend and pushing for its more widespread adoption in the marketplace.

Officials at the Maine DEP say they expect a push from the federal government to require the use of more ethanol-heavy gasoline. Most gasoline available today is a blend with 10 percent ethanol, a corn-based alcohol added to gasoline.

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Turns out they can also make you sick. Certain fast-growing trees used for biofuels in Europe can also "increase concentrations of ground-level ozone, resulting in millions of tonnes in crop losses and an additional 1,385 deaths per year," reports Climate News Network, teasing out the results of a recent study (abstract here) by a UK research team published in Nature Climate Change. The ozone in the upper atmosphere is a good thing—it "filters out dangerous ultra-violet sunlight." But at ground level, ozone is a "toxic irritant" that makes people wheeze and can be life-threatening for vulnerable populations. When it wafts into fields where crops are grown, ground-level ozone also "causes more damage to plants than all other air pollutants combined," the US Department of Agriculture reports.

The authors offer a few solutions to mitigate the problems they identify:

The Lancaster team suggest that the unwelcome consequences could be mitigated by the choice of coppice trees genetically engineered to reduce isoprene emissions—one genetically modified poplar has already been tested under laboratory conditions—or by the choice of other biofuel crops such as grasses, or by shifting biofuel production away from densely populated areas and highly productive cereal land.

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The ethanol mandate means that ordinary Americans pay more for a poorer quality automobile fuel and more for groceries. Ethanol proponents claim these costs will bring us environmental benefits and energy security. They are wrong.

A good first question about a mandate is "how good can a product be if you have to force people to buy it?"

The answer: not very good. Ethanol is vastly inferior to gasoline.

Consider these glaring drawbacks: Its energy density is a third lower, reducing cars' emissions. It attracts water, so it cannot be transported in regular gas and oil pipelines, reduces lubricants' effectiveness, and shortens engine lives. It is caustic, corroding engine parts and dislodging contaminants from fuel tanks.

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For the first time since the 1970s, food is becoming less affordable.

Last year, the average U.S. family of four was hit with $2,000 in increased food costs, according to a study released Tuesday by FarmEcon, LCC. This dramatic change in food affordability is due in large part to booming prices for corn—a key ingredient in animal feed and staple consumer foods—brought on by the Renewable Fuel Standard (RFS).

The study predicts even greater food costs in the year ahead. With the RFS intact and high prices expected for major crops through mid-2013, Americans are likely to see another substantial increase in the food bill.

This increase in food spending is diverting consumer dollars away from discretionary items. Less money flowing into other economic sectors is contributing to the slow rate of improvement in unemployment, job creation and total U.S. income.

Aside from major, unlikely increases in corn production, the study advises, food affordability relief could only be achieved by lowering the ethanol production incentives created by the RFS.

"Bioversel Trading hired CN Rail to import tanker loads of biodiesel to the U.S. to generate RINs (renewable identification numbers), which are valuable in the U.S. because of a 'greening' policy regulating the petroleum industry. The EPA's 'Renewable Fuel Standard' mandate that oil companies bring a certain amount of renewable fuel to market, quotas they can achieve through blending biofuel with fossil fuel or by purchasing RINs as offsets.

Because RINs can be generated through import, the 12 trainloads that crossed into Michigan would have contained enough biodiesel to create close to 12 million RINs. In the summer of 2010, biodiesel RINs were selling for 50 cents each, but the price soon fluctuated to more than $1 per credit.

Once 'imported' to a company capable of generating RINs, ownership of the biodiesel was transferred to Bioversel's American partner company, Verdeo, and then exported back to Canada. RINs must be 'retired' once the fuel is exported from the U.S., but Bioversel says Verdeo retired ethanol RINs, worth pennies, instead of the more valuable biodiesel RINs. Bioversel claims this was all perfectly legal."

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The report said trees grown to produce wood fuel - seen as a cleaner alternative to oil and coal - released a chemical into the air that, when mixed with other pollutants, could also reduce farmers' crop yields.

"Growing biofuels is thought to be a good thing because it reduces the amount of carbon dioxide in the atmosphere," said Nick Hewitt, who worked on the study with colleagues from England's Lancaster University.

"What we're saying is 'yes, that's great, but biofuels could also have a detrimental effect on air quality'," he added.

The report, in the journal Nature Climate Change, looked into the impact of a European Union scheme to slow climate change by producing more biofuels.

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Dear W.L.: Here is what the news story was about and how it affects drivers. You may not even notice the sticker at the gas pump, but next to each pump is a square sticker stating E10, E85 or E15. E85, E15 or E10 tells you the percentage of ethanol blended in your gasoline. Note E85 is for “Flex-Fuel” vehicles only.

Ethanol is a corn derivative that now comprises 10 percent of the gasoline at most filling stations throughout the United States. Called E10, its main function is to reduce the amount of foreign oil we consume and produce fewer emissions. While this sounds great in theory, some evidence has shown that ethanol-blended gasoline can be harmful for various reasons, and now the EPA has approved as much as 15 percent, a 50 percent increase, of our gasoline be laden with it.

The EPA needs to recognize that no substantial testing has been conducted to determine the long-term effects of 15 percent ethanol-blended gasoline, or E15, and that further analysis and assessment are required before caving to the pressure of ethanol special interests.

Here’s why:

Tests have shown that fuel efficiency drops with all ethanol as it has 30 to 35 percent less energy density than regular unleaded gas. This will force drivers to buy more fossil fuel and can increase our dependency on foreign oil, not to mention cause cars to produce more emissions. 

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The Pennsylvania Farm show, which opened Saturday, may be a lot of fun, but farming in the Keystone state is serious business, bringing in $6.7 billion in annual receipts statewide. The state's 62,200 farms cover 7.75 million acres.

Milk production alone is a $2.34 billion business, with Pennsylvania dairy farmers' production at 1.2 billion gallons annually.

This year farmers producing that milk are under extra stress. The cost of the feed corn given to dairy cows, which was $2.50 a bushel just five years ago, now it is hovering around $7 a bushel. A bushel is generally about 56 pounds of corn.

The price tag has been driven up by two factors: the nation's use of corn to produce ethanol as a fuel additive and the midwestern drought that struck hard this summer and damaged crops.

When corn prices first spiked in the middle of the summer and the fall, Virginia Ishler, the dairy complex manager at Penn State's College of Agricultural Sciences, said "a lot of guys were panicking."
"We were telling folks, you need to sit down and look at the numbers for your farm," she said.

Farming is not for the arithmetically challenged. There are costs of equipment to be factored into the reoccurring costs of fertilizer, seed and pesticides; veterinary care for the animals; and then, for those who do not grow enough to feed their animals, feed.

For every 80 pounds of milk a dairy cow produces, it eats 120 pounds of feed. That can add up.

Meanwhile, in rural areas, subsistence farmers struggle to find a place to sow their seeds. On a recent morning, José Antonio Alvarado was harvesting his corn crop on the narrow median of Highway 2 as trucks zoomed by.

“We’re farming here because there is no other land, and I have to feed my family,” said Mr. Alvarado, pointing to his sons Alejandro and José, who are 4 and 6 but appear to be much younger, a sign of chronic malnutrition. 

Recent laws in the United States and Europe that mandate the increasing use of biofuel in cars have had far-flung ripple effects, economists say, as land once devoted to growing food for humans is now sometimes more profitably used for churning out vehicle fuel. 

In a globalized world, the expansion of the biofuels industry has contributed to spikes in food prices and a shortage of land for food-based agriculture in poor corners of Asia, Africa and Latin America because the raw material is grown wherever it is cheapest. 

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To understand how we got to this unhappy place, a bit of history is needed. Renewable fuels such as ethanol and biodiesel have long been hailed as alternatives to America's reliance on petroleum. The fuels bolster crop farmers' incomes and claim to protect the planet by recycling carbon from the air. As prices at the pump climbed over the last decade, biofuel proponents rallied support for a mandate to replace petroleum with home-grown biofuels.

In response, Congress created the Renewable Fuel Standard (RFS) in 2005, which increased the amount of ethanol blended into the gasoline supply each year. Initially, the target was 7.5 billion gallons for 2012. That would have been a safe goal, one that could be met by blending ethanol into gasoline at levels below the 10-percent limit compatible with most of the millions of engines already in use.

But that target wasn't enough for some interests, who worked on Capitol Hill to exploit ongoing concerns about rising oil prices and energy security.

With ink barely dry on the original RFS, biofuel boosters teamed up with energy security hawks and several green groups to promote a bigger and bolder mandate. Pitching a grand plan for "growing energy" as a win-win solution, they worked with allies in Congress to craft complex requirements for a vastly expanded RFS, giving biofuel producers and financiers a massive guaranteed market that more than quadrupled the original target.

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American taxpayers, families and workers—come on down! In 2007, Congress made you an unwitting game show contestant when they expanded the Renewable Fuel Standard (RFS), a program that mandates large quantities of biofuel—made from corn and other biomass—be blended into the fuel supply. The twist in this game show? It's your money on the line, and only ethanol producers are winning.

The RFS mandate affects the prices of two of America’s (and the world’s) most vital commodities—food and fuel. In 2011, 40 percent of the nation’s corn crop was processed into biofuel, rather than food and livestock feed. The shrinking supply of corn for food has caused prices to spike nearly 18 percent, raising food costs for a family of four between $1,344 and $2,658 per year. In December, the National Council of Chain Restaurants released a study, which estimates that by 2015, when the RFS is fully phased-in, the mandate will increase total costs for chain restaurant owners by up to $3.2 billion per year. Anti-hunger groups have also taken note. In October 2012, ActionAid released a study outlining how RFS-related food price increases put developing countries at risk of famine.

Ethanol could also increase fuel costs. Experts have said that RFS mandates are likely to increase ethanol prices by 18.8 percent, raising the cost of gasoline, which is required to be blended with ethanol. In fact, fuel that is up to 85 percent ethanol is more expensive than pure gasoline, even with today’s petroleum prices and biodiesel costs more than $1.50 more per gallon to produce.

What’s more, ethanol producers received $20 billion in taxpayer subsidies between 2005 and 2011—$64 for every American.

And these are just a few of the ways Americans are forced to play a losing hand. Check out the infographic below to learn more about how RFS impacts your wallet, and browse this site to learn how RFS and U.S. biofuels policy affect the economy, food prices, engine performance and the environment.

If you agree that Americans deserve a Smarter Fuel Future, sign our pledge to demand change.

The results of the PwC study are now available in a report entitled “Federal Ethanol Policies and Chain Restaurant Food Costs.”

PwC concluded that the RFS mandate, which requires an ever-increasing volume of ethanol fuel from corn to be blended into gasoline each year, significantly increases the food input costs of chain restaurant operators.

PwC estimated that by 2015, when the RFS is fully phased-in, the RFS mandate will increase total costs for chain restaurants owners by up to $3.2 billion per year for every year the RFS remains in effect.

For the full study, click here

The analysis commissioned by the National Council of Chain Restaurants concluded the federal government’s Renewable Fuel Standard would increase the cost of eating out by $3.2 billion every year. Under this mandate adopted in 2005, an arbitrary and increasing amount of ethanol must be sold each year. It’s a policy guaranteeing a windfall for suppliers of the corn used to make this unnecessary fuel additive.

For 2015, these agribusiness giants will sell an extra 6 billion gallons of their product, not because Americans want it, but because Uncle Sam says so. To meet the increasing — and artificial — demand, farmers must shift production away from crops that put food on the table or feed livestock. This comes at a cost.

The green eyeshades figure that the reallocation of farming resources will drive up the cost of corn by 27 percent, pork 15 percent, potatoes 13 percent, beef 8 percent and eggs 11 percent. This means items on the supermarket shelves become less affordable. The cost of french fries, Big Macs and Egg McMuffins also goes up.

An average fast-food restaurant spends about $180,000 a year on livestock and poultry products. For an industry that, for example, buys 2.3 billion pounds of potatoes each year, even a price shift measured in pennies hits the bottom line hard. Such an increase could prove fatal for family-owned restaurants already struggling in this economy.

“I never done anything like this in my life but I have a responsibility to my employees, fellow franchisees, customers, and my family to make sure Congress knows a well-intended idea turned out to be a very serious problem and it’s getting worse,” said the Wendy’s Quality Supply Chain Cooperative Chairman Ed Anderson on the renewable fuel standards.

“Today, each of our restaurants pay twenty to $30,000 more per year because of the renewable [fuel standards],” he continued.

“Maybe that’s not a big number for some people, but it is for us. That’s 80 [thousand] to $120,000 more dollars per day for food for over 5,800 restaurants in the U.S.” Anderson explained. “That’s up to $174 million dollars more of current food costs just for the Wendy’s system – 80 percent of which is owned by franchisees like us.”

Wendy’s Quality Supply Chain Cooperative (WQSCC) is a not-for-profit co-op for Wendy’s Restaurant operators that purchases food for Wendy’s Restaurants. The chairman made his remarks on Capitol Hill in late November.

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CNBC's Phil Lebeau reports on a new warning issued by the AAA on Friday concerning the sale of new E15 gasoline, a fuel blend containing 15% ethanol. According to a survey conducted by the motorist association, 95% of consumers have not heard of E15, which was approved for sale by the EPA in June. Currently, only about 12 million vehicles are approved to use E15 gasoline, leaving approximately 228 million vehicles on America’s roads that are incompatible with the new fuel.  Seven auto manufacturers claim E15 does not comply with their fuel requirements while five others have stated that damage caused by improper E15 use is not covered under warranty. The AAA urged regulators and the gasoline industry to suspend the sale of E15 until gas pump labeling and other consumer awareness efforts have been implemented. 

Our troops on the front lines are being forced to use equipment well past its service life. We have terminated more than 50 modernization programs in the past two years and drastically scaled back and slowed down the production of ships, ground vehicles and aircraft, increasing overall costs. Our equipment reset costs after years of fighting will be in the billions.

All of this is coming at a time when the Obama administration has cut the defense budget by $487 billion and will potentially cut another $500 billion because of the sequester, devastating our military readiness and national security. Despite decreasing military funds, the administration continues to force the military to spend more on an expensive alternative energy agenda, including the purchase of biofuels for operational use and the construction of commercial biofuel refineries.

While I fully support the development and use of all alternative fuels, the priority for our defense spending must be maintaining readiness.

Navy Secretary Ray Mabus’ primary focus must be on the readiness of our Navy — not taking funds needed for operations and maintenance or defense modernization to prop up the unproven biofuel industry.

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The National Council of Chain Restaurants, a restaurant trade group, asked PricewaterhouseCoopers to conduct the study, which was released this week.

The study estimates the average chain location could see its costs increase by $18,000 a year starting in 2015 when a biofuels mandate known as the Renewable Fuel Standard increases to 15 billion gallons. Overall, the mandate could cost chain restaurants up to $3.2 billion annually, according to the trade group, which represents such major chains as Outback, McDonald’s and Wendy’s,

The Renewable Fuel Standard, a 7-year-old law that requires 13.2 billion gallons of corn-based ethanol to be blended into the vehicle fuel supply this year, has been widely criticized by livestock, state governors and other groups. They argue consumers end up paying more at the grocery store because corn is being siphoned off to produce ethanol instead of being used for food or livestock feed. Ethanol is expected to use 4.5 billion bushels of corn, or about 40 percent of the country’s corn production this year.

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AAA, which issued its warning Friday, says just 12 million of more than 240 million cars, trucks and SUVs now in use have manufacturers' approval for E15. Flex-fuel vehicles, 2012 and newer General Motors vehicles, 2013 Fords and 2001 and later model Porsches are the exceptions, according to AAA, the nation's largest motorist group, with 53.5 million members.

"It is clear that millions of Americans are unfamiliar with E15, which means there is a strong possibility that many may improperly fill up using this gasoline and damage their vehicle," AAA President and CEO Robert Darbelnet tells USA TODAY. "Bringing E15 to the market without adequate safeguards does not responsibly meet the needs of consumers."

BMW, Chrysler, Nissan, Toyota and VW have said their warranties will not cover fuel-related claims caused by E15. Ford, Honda, Kia, Mercedes-Benz and Volvo have said E15 use will void warranties, says Darbelnet, citing potential corrosive damage to fuel lines, gaskets and other engine components.

Gasoline blended with 10% ethanol has become standard at most of the nation's 160,000 gas stations, spurred by federal laws and standards designed to use more renewable energy sources and lessen the nation's dependence on foreign oil. Pushed by ethanol producers, the EPA approved the use of E15 -- a 15% ethanol-gasoline blend -- in June over objections from automakers and the oil industry. It's been available at a handful of outlets in Kansas, Iowa and Nebraska since July.

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• Raises prices for staple foods;
• Damages the environment;
• Puts consumers at risk of engine damage; and
• Costs our nation $30 billion in economic growth.

Americans deserve a better solution – a smarter solution. 

Click the below links to see what organizations from a variety of sectors think about today’s decision:

• “Livestock, Poultry, Dairy Producers Say RFS Is ‘Broken’”
• Friends of the Earth:  “EPA prioritizes ethanol industry above struggling citizens”
• Clean Air Task Force: “EPA's Failure to Waive Ethanol Mandate Proves Outdated Policy Needs an Overhaul”
• American Fuel and Petrochemical Manufacturers: “AFPM Responds to EPA Rejection of a Request for Renewable Fuel Standards Waiver”
• Grocery Manufacturers Association Statement on EPA Renewable Fuels Standard Waiver Decision
• Competitive Enterprise Institute: "EPA Denies RFS Waiver Petitions"
   

Thanksgiving is a time to gather with friends and family. For many, the holiday also evokes images of football, cornucopias, pilgrims and a table filled with traditional food, including pumpkin pie, cranberry sauce and roasted turkey with stuffing.

In fact, nearly 88 percent of American families are expected to eat turkey on Thanksgiving. But the economics of hosting Thanksgiving dinner for extended family can be challenging. This year, as food prices continue to rise, some might want to pass their wallets along with the peas and carrots.

According to the American Farm Bureau Federation’s survey, turkey dinner and all the fixings for 10 people will cost $49.48, or about 35 percent more than it did when the Renewable Fuel Standard was first passed in 2005.

This is a result of the worst drought in more than 50 years and an energy policy that diverts 40 percent of our corn crop away from food and animal feed in order to meet the current ethanol mandate. Prioritizing fuel over food has real impacts on global poverty rates, our national security and the prices we pay at the supermarket.

The below infographic details the widespread impact of the Renewable Fuel Standard on the food spectrum and Thanksgiving dinner in particular.

If you believe there is a smarter way forward, tell your family and friends about ethanol’s negative impact on your Thanksgiving dinner and sign up to receive updates from SmarterFuelFuture.org. 

An economist in Indianapolis just calculated that the U.S. is losing a million jobs this year—along with $30 million in economic growth—because we shifted too much of our corn into ethanol. Tom Elam says direct employment in the food industry would have produced three times as many jobs processing and marketing meat as making ethanol from the same corn. Elam calculates the foregone jobs at 941,000. That doesn’t even count the myriad of jobs that would have been needed to support the newly employed one million Americans.

Based on recent history, U.S. consumers got less meat and milk than they would have liked. Consumer spending on these items veered sharply down from its historic trend after President Bush radically raised the nation’s ethanol mandate in 2007. Elam predicts these problems will only get worse. The EPA‘s approval of 15 percent ethanol in gasoline will likely push corn fuel use up faster than corn yields are rising.

Without the ethanol mandate, U.S. feed exports would increase too (a job creator). Also, our cost of driving would come down even as the prices of pork chops, broilers, and hamburger came back within the reach of stressed-out US food buyers.

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Even E10, the gasoline with 10-percent ethanol that's sold in most of the country, can have harmful effects on the small, non-road engines used in outdoor power equipment. Without ethanol in the fuel, gas to which you've added a stabilizer like Sta-Bil could sit in an engine for a month or two without harmful effects. But with E10 gasoline, storing a machine without starting it up regularly or, for wintertime storage (summertime for snowblowers), without running down the engine till it's dry can ruin it. Rubber and plastic parts become brittle, and moving parts can crust up from impurities in the water that ethanol, being an alcohol, attracts.

The U.S. Environmental Protection Agency has approved the use of E15 gasoline in cars with model years 2001 or later and says it's not approved for older cars, outdoor power equipment, and other engines (such as those in boats). By law, labels to that effect must be posted on all pumps dispensing E15. Still, Kiser has described a number of situations in which someone could inadvertently put E15 into an unapproved engine.

If the average person is gassing up a late model car and also has a gas can to fill for the mower and string trimmer, for instance, would the customer really put back one pump's nozzle and gas up from another pump, especially if driving a few feet from the E10 pump to the E15 one is necessary? And if a landscaper gives his crew cash to fuel up all the machines, will the workers know not to just gas up with the cheapest fuel? It's a no-brainer not to fuel up with diesel or kerosene. But to most people, gasoline is gasoline.

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Ethanol and Food Prices

Projections estimate that by 2016, the United States will have diverted up to 43 percent of its cropland toward ethanol production. Since such land is normally used to harvest grain for feeding livestock, any diversions to ethanol production would require either changing the use of other land to growing grain or sharp increases in the cost of grain and meat. Given these ramifications, it is no surprise that a myriad of global organizations have opposed the biofuel mandate, including the World Trade Organization, Food and Agriculture Organization of the United Nations (FAO), International Fund for Agricultural Development, International Monetary Fund, Organization for Economic Co-operation and Development, UN Conference on Trade and Development, World Food Program, International Food Policy Research Institute, UN High Level Task Force, and the World Bank. In a recent opinion piece in the Financial Times, José Graziano da Silva, director-general of the FAO, also called for the suspension of biofuel use. He noted that “an immediate, temporary suspension of that [ethanol] mandate would give some respite to the market and allow more of the crop to be channeled towards food and feed uses.”

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Specifically, the Competitive Enterprise and Action Aid folks noted that the EPA failed to consider multiple peer-reviewed studies documenting the link between ethanol and world hunger in its public health literature review, as required by law. That includes one paper that concludes that biofuel mandates are responsible for at least 192,000 premature deaths every year. Overall more people die from chronic hunger world-wide than malaria, tuberculosis and AIDS combined.

President Obama declared in May that "As the wealthiest nation on Earth, I believe the United States has a moral obligation to lead the fight against chronic hunger and malnutrition, and to partner with others." He saluted U.S. global food programs but noted with characteristic understatement that "when tens of thousands of children die from the agony of starvation, as in Somalia, that sends us a message we've still got a lot of work to do. It's unacceptable. It's an outrage. It's an affront to who we are."

This sentiment did not trickle down to the EPA, which is less concerned with feeding the world than feeding the ethanol lobby and buying Farm Belt electoral votes. The EPA will now rule on the hunger issue post-election.

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 ”…this is also a year of food deficit, in which we will consume (31 million tons) more grain than farmers produced. If 2013′s harvest does not establish a new world record, the poor are in serious trouble.”

His main point is that thanks to a growing demand for food driven by an increasing population and improving standards of living, along with the conversion of grains into fuel, the world has to break harvest records every year to keep up. Thanks to grain reserves, humanity can weather years that don’t break records, but failing to break records for two or three years in a row means hunger for hundreds of millions because the price of food will spike as speculators capitalize on the fact that low supply relative to demand equates to higher prices. If weather extremes become more and more common, the odds of running out of reserves becomes more and more likely. (See more: Midwestern Drought, Ethanol, & Renewable Fuel Standard)

It is the prediction of things like mass starvation that help prevent things like mass starvation. This self-nullifying tendency is why a lot of predictions fail to materialize. Ignoring the prediction of massive traffic jams due to road construction could mean that you are the only one on the road because everyone else heeded the prediction, or it could mean that you are stuck in gridlock because you were not alone in ignoring it.

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It’s a simple message that most people get, but what happens when one of the supposed alternatives also becomes not just a climate killer, but a driver of hunger? Then surely it’s time to stop and rethink?

Yesterday, the European Union (EU) took a tentative step towards solving this problem by changing its previous policy of increasing biofuel use for cars and trucks by proposing to cap it at 5%.

So why the change of heart?

Because the EU has been forced to recognise that growing crops for biofuels mean less crops available for food and likely price hikes as demand increases. The US, EU, China, India and Brazil all have set targets for a sharp increase in the use of biofuels. This resulted in huge additional demand for cereals, grains, sugar and oilseeds, further exacerbating recent increases in food prices compounded also by the impacts of the drought in the US last summer. Currently about 40% of US corn production is devoted to biofuel.

In a recent report, Oxfam concluded that the demand for biofuels has pushed millions of people to poverty through rising food prices. In 2008, when biofuels accounted for 3.5% of transport fuel in the EU, a study commissioned by the EC estimated that 70,000 km² of land was needed to grow biofuel crops and close to half of that area was estimated to be located outside of Europe. If this amount of land had been used to produce wheat and maize instead, it could have fed 127 million people for an entire year.

Increasing the price of food as well as reducing its availability should be enough reasons to suspend biofuel mandates. However, expanding biofuel production also has severe negative climate impacts as it often displaces crop production farther into threatened forests, savannahs and peatland or increase the use of oil-based fertilizers and pesticides. The destruction of ecosystems for biofuel crop production leads to massive greenhouse gas emissions as intact ecosystems are natural carbon sink.

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As part of an effort to reduce greenhouse gas emissions, the European Union had previously decided that 10 percent of the fuel used for transport in the 27-country bloc must come from renewable sources by 2020.

But environmentalists argue that biofuels made from food, like corn and soybeans, may add as much or even more to greenhouse gas emissions as fossil fuels they replace because trees are often felled to grow them. Others have criticized the burning of food while there are still millions who can't afford to eat.

In response, the European Commission, the EU's executive arm, proposed Wednesday that food-based fuels only be allowed to contribute to half of the 10 percent target. The rest should come from more advanced biofuels that don't take up valuable farming land — like algae or waste.

The commission is also suggesting that the efficiency targets that biofuels must reach before they receive subsidies should be increased. Currently, they must emit 35 percent less greenhouse gas than the fuels they replace; that number will rise to 50 percent in 2017 and eventually to 60 percent.

As a result, the future of California's dairy industry looks sour. Around 100 farms are expected to go bankrupt this year alone, and the trend seems likely to continue if nothing is done.

Because of the demand for grain to produce the gasoline additive ethanol - which was supposed to reduce air pollution - plus a nationwide drought, many of the state's cash-strapped farmers are selling their cows for slaughter because they can't afford to feed them. It's a "perfect storm," says Colin Carter, professor of agricultural economics at UC Davis, that could spell trouble for the county's milk supply - 1 out of 5 glasses of milk consumed in the United States comes from California cows. And the increasing price of grain is hurting all livestock industries.

What can be done?

-- The federal law mandating that gasoline contain 10 percent ethanol - 13.2 billion gallons this year - has an escape clause. In an emergency, it can be lifted temporarily by the Environmental Protection Agency. Six states have petitioned for relief. The dairy industry looks on this as an emergency - ethanol consumes one-third of the nation's corn crop, and next year the share could be higher.

-- Biofuel alternatives to corn ethanol need to be explored and developed. The corn fuel seemed like a good idea when it was invented, but even our immense agricultural industry can't feed us and fuel us at the same time. And some experts doubt that ethanol has any net benefit to air quality anyway, especially when the economic and environmental costs of producing it are factored in.

Brazil produces ethanol from sugarcane in a process greatly cheaper and more efficient than the production of corn ethanol. Other possible sources include algae, switchgrass and waste material from vineyards - sources that aren't productive yet but hold promise. Research could lead to new breakthroughs.

With an earlier Congressional Research Service study projecting the energy sector to account for 85 percent of the growth in domestic water consumption between 2005 and 2030, the GAO report says the federal government must improve oversight on the nexus between water and energy.

The report calls for the Energy Department to institute an oversight program to evaluate water availability and use by energy producers. It notes the Energy Policy Act of 2005 required the department to implement a similar program, but has so far failed to do so.

The report adds that climate change, population growth, increased competition for energy resources and demographic changes would “exacerbate the challenges associated with water and energy supply and demand, and shifts in any of these areas are expected to increase demand for both of these resources.”

Higher energy consumption in general has required using more water for cooling power plants. A significant amount of the growth in water consumption also has come from the emergence of new energy production methods.

For example, hydraulic fracturing used to tap hard-to-reach oil-and-gas deposits revolutionized the natural-gas drilling industry. Known as fracking, that process injects a high-pressure mixture of water, chemicals and sand into tight rock formations to unlock fossil fuel reserves.

Biofuels production also has siphoned considerable amounts of local water for growing feedstocks, the report noted. A federal rule requires refiners to nearly triple current production levels by blending 36 billion gallons of biofuel into traditional transportation fuel by 2022.

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Experts in the industry estimate that by year's end California, the largest dairy state in the nation, will have lost more than 100 dairies to bankruptcies, foreclosures and sales. Milk cows are being slaughtered at the fastest rate in more than 25 years because farmers need to save on corn costs. According to the Western United Dairymen, a California trade group, three dairy farmers have committed suicide since 2009, despairing over losing their family's dairies.

"I've never seen it as dire as it is now," said Frank Mendonsa, a Tulare dairyman who serves on the Western United Dairymen board. "Pride is just eating these guys up. People are calling me and asking me what to do. It becomes like a counseling session to stop people from hurting themselves. But it's not just losing our jobs that is driving the desperation. We're losing our houses, in some cases the same houses that our grandparents lived in, and we're losing our entire identities."

The problems started in 2009, when milk prices bottomed out and grain prices soared, partly due to the government's ethanol mandate. Congress is requiring that gasoline producers blend 15 billion gallons of ethanol, made from corn, into the nation's gas supply by 2015. Dairy farmers were forced to borrow against their land and cows to make their bills.

Then, this year, the worst drought in half a century struck in the Midwest, and corn prices tipped the scale at more than $300 a ton. Historically, the price for corn has averaged $130 a ton. Even though milk prices have slowly come up - in November, it will be at a near record high of $23.17 for 100 pounds of fluid milk - farmers are barely breaking even because of grain and hay costs. Experts predict that consumers will start seeing a price increase for dairy products at the cash register starting in November.

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Last week, the “soaring cost of grains used in animal feed” forced family-owned Zacky Farms into Chapter 11 bankruptcy protection, The Wall Street Journal reports. The California company, founded in 1928 and considered a “relatively small poultry producer,” has been shelling out $1.8 million per week to feed its 1.9 million turkeys and 600,000 chickens as corn costs reach record highs of $8 per bushel—twice the cost of corn just three years ago. According to the National Chicken Council, corn represents the largest single cost in raising chickens and turkeys.

This price spike, brought on in part by the drought, is largely a result of the Renewable Fuel Standard. To meet the biofuel production and use mandates laid out by the RFS, 40 percent of the U.S. corn crop is needed to produce ethanol, significantly cutting into the corn available food and animal feed. Since its establishment in 2005, the RFS has increased the price of corn by more than 200 percent and raised the cost of soybeans—another common ingredient in animal feed—by more than 90 percent.

 Read the full story on Zacky Farms here, and learn more about the impacts of the RFS on the food supply in the Impacts section of our website.

It is not surprising that the ethanol lobby has come out in full support of the RFS; the government mandate props up dirty and dangerous biofuels by requiring their use in the nation’s gasoline supply at much higher levels than would occur without the mandate. The policy benefits the biofuels industry by creating a demand for corn ethanol — the most common biofuel in the nation—at the expense of the public health and our natural resources

Since the RFS was established in 2005, food prices in the United States have increased 17 percent. As the mandate increases and more U.S. agricultural land is devoted to growing biofuel feedstocks instead of food, we will likely continue to see a rise in food prices worldwide.

The environmental consequences are also significant. Producing biofuels to fulfill the RFS will require more water, fertilizer, pesticides and energy over the coming years. This reckless policy is driving the conversion of wildlife habitats and forests to farmland, compounding air and water pollution, and decreasing soil quality around the country. It is also worsening climate change, which will increase the occurrence of droughts and other catastrophic weather events. The EPA’s own data shows that most corn ethanol production results in more greenhouse gas emissions than traditional gasoline.

The ethanol lobby wants us to ignore the impacts of its cash cow policy, but the RFS and the dirty biofuels it supports are increasing food prices and causing irreversible environmental harm. Congress needs to take the lead and revisit the RFS immediately.

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The extended and widespread US drought is straining corn supplies at a time of record demand. Roughly 40% of US corn is now consumed in the production of ethanol, a practice that has been encouraged by a range of U.S. government mandates and incentives. There is no doubt that the diversion of what amounts to 15% of world corn supply into fuel has put significant upward pressure on food prices. The National Academy of Sciences estimates that global biofuels expansion accounted for 20 – 40% of the price increases seen in 2007-8, when prices of many food crops doubled.

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Now a recent report links ethanol mandates to civil unrest, social upheaval, and even war.

As the report shows, rising food prices have been a significant contributor to global unrest, particularly in the Middle East. High food prices have long been associated with riots and civil unrest. In 1848, a wave of droughts and crop failures led to the toppling of governments throughout Europe. Hunger breeds desperation, and the inability of government to deal with the situation can lead to loss of confidence and legitimacy. All of this creates conditions that are ripe for an outbreak of mass violence, which can be triggered even by an otherwise unrelated incident.

The connection between food price spikes and civil unrest continues up to the present day. In 2008, a spike in food prices coincided with more than sixty riots in thirty different countries. After falling sharply in 2009 as a result of the Great Recession, food prices began rising again, reaching their previous peak towards the end of 2010. On December 17, 2010, Tunisian street vendor Mohamed Bouazizi set himself on fire in protest of government bureaucracy and regulation. His death sparked major protests, which soon spread throughout North Africa and the Middle East, ultimately leading to the overthrow of several governments in what became known as the Arab Spring.

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Corn ethanol boosters held yet another pep rally today (Sept. 27) for a dirty, inefficient fuel that has eliminated jobs, increased the price of food and gas, damaged engines and increased pollution.  Yet it has replaced less than 1 percent of world oil.

So it’s no surprise that reforming the corn ethanol mandate is one of the few issues that brings together Democrats and Republicans. This mandate, passed by Congress in 2005 and expanded in 2007, requires 15 billion gallons per year of conventional biofuels (mainly corn ethanol) to be blended into vehicle fuel by 2015.

Why the opposition?

One reason is that corn ethanol is destroying jobs in rural America. At a time when too many Americans are struggling to find work, it’s unconscionable that a government policy is making it even harder. But the corn ethanol mandate contributed to the closure of more than 60,000 pork, poultry, and beef operations since 2007. That’s because the mandate has diverted more than 40 percent of our corn crop to fuel, driving up the cost of feeding livestock. Animal agriculture supports more than 1.8 million jobs – or roughly 20 times as many jobs as the ethanol industry offers.

Another reason is that shifting food and feed to fuel is jacking up the price of food, according to the Congressional Budget Office, the United Nations, the International Monetary Fund and other authoritative bodies.

Since Congress expanded the corn ethanol mandate in 2007, the Consumer Price Index for meat, poultry, fish and eggs has risen by 79 percent. The current drought has rendered corn supplies scarce. But under the mandate, corn ethanol continues to “eat first.”

For the poorest Americans, who spend a quarter or more of their income of food, spiking food prices add to their pain. For the global poor, the stakes are even higher. Oxfam, the international relief organization, has calculated that biofuels have endangered the livelihood of 100 million people and dragged more than 30 million people into poverty.

Corn ethanol puts pressure on gasoline prices.  Because corn ethanol is far less efficient than gasoline, consumers have to use more to travel the same distance. On a per-mile basis, corn ethanol is more expensive than gasoline. By contrast, new fuel efficiency standards for cars and light trucks will double mileage per gallon and save Americans $1.7 trillion at the pump.

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Drought conditions this summer have driven up the cost of corn, a main source of feed for hogs. Farmers have been sending more animals to slaughter -- including breeding sows -- in order to reduce their herds and cut costs.

So right now, experts say, there's an oversupply of pork.

"Prices will remain stable and might even come down" this year, said Andy Dietrick, director of public relations for Indiana Farm Bureau.

But by this time next year, when farmers are no longer sending as many animals to slaughter, less pork will be available, and consumers will see higher prices.

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Under a new rule, the EPA will require you to buy a minimum of four gallons of gas from any pump that sells E15, or gasoline that's 15% ethanol.

Ethanol is the controversial fuel additive made mostly from corn.

Most stations sell E10, or 10% ethanol. But the handful of stations that sell E15, which made its debut two months ago, generally dispense it from the same pump as E10. Problem is, anyone who fills up with E10 after an E15 buyer could get as much as a quart of residual E15, American Motorcycle Association spokesman Peter Terhorst told the Milwaukee Journal Sentinel.

It's no big deal if you buy a lot of gas. But those who purchase just a few gallons from motorcyclists to folks with lawn mowers could damage their engines and void their warranties. Hence the 4-gallon rule.

The EPA's rule should help mitigate this, to be sure, and most critics contend that the rule reflects bad gas in the first place. The EPA certified vehicles back to the 2001 model year for the 15% ethanol blend, but automakers have demurred. The Auto Alliance, a trade association that represents 11 major automakers, raised concerns last May about potential engine failures. "Automakers did not build these vehicles to handle the more corrosive E15 fuel," Alliance President Mitch Bainwol said in a statement.

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As noted previously on this site (here and here), Vilsack and the RFA tout a study by Iowa State University’s Center for Agricultural Research and Development (CARD), which concluded that if ethanol production had remained at year 2000 levels, the U.S. motor fuel supply would have been billions of gallons smaller and, thus, significantly pricier in 2010 and 2011. Subsequent studies by FarmEcon, LLC and MIT/UC Davis spotlighted CARD’s unrealistic assumption that the refining industry would not have increased gasoline production to meet consumer demand in the absence of policies mandating and subsidizing the blending and sale of increasing quantities of ethanol as motor fuel.

The EPRINC study (Ethanol’s Lost Promise: An Assessment of the Economic Consequences of the Renewable Fuel Mandate) shows, in addition, that if ethanol output had remained constant at the year 2000 level, refiners could have made up for the shortfall without importing or even refining “a single additional barrel of crude oil.” The Renewable Fuel Standard (RFS) has increased ethanol production by about 400,000 barrels per day (bbl/d) since 2000. A “remarkably small operational adjustment” in refineries’ product mix – a 1.8% increase in gasoline production — could have covered an ethanol shortfall of 400,000 bbl/d in 2011.

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But if the ethanol industry is in favor of E15, you can probably guess that the petroleum industry is against it. And you'd be right. After all, 5% more ethanol means 5% less petroleum. Gasoline sales have been declining for the past few years anyway, and the petroleum industry is none too happy about losing even more market share if E15 blends come onto the market.

Both the ethanol and petroleum industries are so odious that it's hard to pick sides here. As it turns out, though, the anti-E15 crowd has some intriguing arguments. The primary one is that E15 only works in cars manufactured after 2001. It doesn't work in older cars, it doesn't work in boats, and, as the Outdoor Power Equipment Institute will tell you, it doesn't work in devices like chain saws, utility vehicles, and lawn mowers. In fact, it can destroy those things if you use it accidentally.

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In a move likely to take that confidence away from the American consumer, EPA decided to allow the use of gasoline containing 15 percent ethanol (E15) for model year motor vehicles 2001 and newer, a 50 percent increase from the current limit of 10 percent ethanol (E10). In its rush to force E15 on the market, the EPA neglected to conduct basic testing necessary to ensure the safety of American consumers. Rather, it placed political science and largesse for the ethanol industry ahead of real science and consumer welfare.

Furthermore, under the Renewable Fuels Standard, or RFS, refiners will likely be mandated to blend increasing amounts of biofuels, of which primarily ethanol is a significant portion of the mandate, into the fuel supply, eventually reaching 36 billion gallons by 2022.

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This unprecedented EPA overreach applies when filling up at a gas station that provides both E15 and E10, gasoline with 15 or 10 percent of ethanol, respectively, from the same hose.

At the insistence of the ethanol industry, the Obama Administration is pushing E15 into the marketplace, regardless of the serious concerns about the fuel’s impact on drivers. From its inception, E15 is a study in the consequences of government interference in the marketplace. The EPA’s decision to set a minimum purchase requirement is just the most recent example.

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On top of the drought’s impact on corn prices is the impact of the federal Renewable Fuel Standard (RFS). The RFS sets a floor on the volume of ethanol that must be included in the U.S. gasoline supply. This floor ratchets up every year. Because cellulosic ethanol from non-food sources, such as switch grass and wood chips, has failed to develop as hoped, nearly all of the mandated ethanol is distilled from corn. Although the mandate’s effect on corn prices can be significant—perhaps as high as 68 percent—calculating the impact is not straightforward.

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The European Commission, the executive arm of the European Union, said Monday it plans to limit the use of biofuels derived from food crops to 5% of transport fuel, in a radical change to its biofuel policy.

The EU's climate-change Commissioner Connie Hedegaard and energy Commissioner Günther Oettinger said they wanted to cap the share of energy in the transport sector from food crop-based biofuels—such as rapeseed or palm oil—at current levels.

Statement by American Fuel & Petrochemical Manufacturers (AFPM) President Charles T. Drevna on the Environmental Protection Agency’s (EPA) decision today to increase bio-based diesel volumes to 1.28 billion gallons in 2012:

“EPA’s decision to increase the biomass diesel volumes is wholly discretionary and irresponsible. It only serves to increase our nation’s fuel bill. Given the exorbitant cost of biodiesel, its poor performance qualities, significant fraud in the biodiesel industry, and the drought facing our nation’s farmers and ranchers, this is a bad decision at the wrong time.

“AFPM submitted comments and met with the U.S. Office of Management and Budget to outline the problems associated with increasing the amount of biodiesel beyond the statutory minimum of one billion gallons. Today’s decision will force consumers to pay almost $500 million more next year for diesel fuel and is yet another example of the Obama administration putting politics ahead of American consumers.”

Among the flurry of action -- or inaction -- on renewable energy bills in the last days of the state's legislative session comes a striking but largely unheralded statement of policy from the state of California. Last week, Governor Brown signed into law a bill that excludes corn-derived ethanol fuel from the state's Alternative and Renewable Fuel and Vehicle Technology Program.

Assembly Bill 523, authored by Republican assembly member David Valadao, excludes ethanol made from the edible parts of corn from any loans, grants or incentives included as part of the alternative fuel program. Ethanol from stalks, husks, cobs and other non-edible ag waste isn't affected by the law.

It's an interesting law because ethanol production from corn is more or less a political third rail in many other parts of the country, especially the midwestern states where much of the nation's corn is grown. Corn ethanol has long been criticized for consuming as much or more energy to produce than it provides, and for pushing the retail price of corn higher when increasing numbers of people are hungry.

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Editor’s note 10/12: The EPA public comment period has now ended. Sign up here to receive updates about future opportunities to take action

If you believe affordable food should come before government mandates, now is your chance to take action. From now until October 11, the EPA is seeking comments on petitions filed by 156 House Representatives, 25 Senators and Governors from eight states—including Arkansas, Virginia, Texas, North Carolina, Maryland, Georgia, Delaware and New Mexico—to waive the ethanol mandate in the Renewable Fuel Standard (RFS).

Visit Regulations.gov to submit your comment today.

89 percent of the nation’s corn crop has been affected by the drought—a problem worsened by the RFS, which allocates 40 percent of the diminished corn supply to ethanol production.

Poultry and livestock farmers—whose industries are critical to America’s economic well-being—are struggling to secure corn for animal feed, as bleak supplies have pushed the price of corn to a record high of more than $8 per bushel. Beyond the barnyard, Americans are also struggling—experiencing skyrocketing costs for basic foods as a result of higher corn prices. 

It’s time that the EPA acknowledges the flaws in this policy. Support the petition to waive the ethanol mandate—visit regulations.gov and submit your comment today.

• Petition from members of the House of Representatives
• Petition from members of the U.S. Senate
• Petition from the Governor of Arkansas
• Petition from the Governors of Maryland and Delaware
• Petition from the Governor of Virginia
• Petition from the Governor of North Carolina
• Petition from the Governor of Georgia
• Petition from the Governor of New Mexico
• Petition from the Governor of Texas
• Petition from the Governor of Utah
• Petition from the Governor of Wyoming

Because both sides in the debate over the standard tend to exaggerate, we conducted extensive research into the issue. We conclude that the ethanol mandate has some significant negative consequences and few redeeming features. Even without a drought, the policy is inefficient; with a drought it is much worse. Two economic myths drive support for the ethanol mandate.

Myth 1: Ethanol lowers gas prices by about $1 per gallon.

Research backed by the Renewable Fuels Association (RFA) contends that ethanol reduced gasoline prices by $1.09 in 2011 and $0.89 in 2010, a claim picked up in numerous speeches by Secretary of Agriculture Tom Vilsack. But in a recent research paper, we found such claims to be based on implausible economic assumptions and spurious statistical correlations.

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Congress made several faulty assumptions, among them: that future supplies of corn would be plentiful, that demand for motor fuel would increase and that the state of fuel-making technology would ensure our energy future. Lawmakers just bet the market wrong.

This revelation led Maryland Gov. Martin O'Malley to join Delaware Gov. Jack A. Markell to rightly ask the Obama administration for a waiver of the RFS. Likewise, North Carolina Gov. Beverly Perdue, Arkansas Gov. Mike Beebe, Georgia Gov. Nathan Deal and New Mexico Gov. Susana Martinez have petitioned for waivers.

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Critics have long questioned the commitment of a growing share of a food source for fuel use. But the calls for change have grown louder because the widespread drought has killed more than 50% of the corn crop, driving prices to record levels — and U.S. ethanol is made mostly from corn.

To avert a possible domestic and international food crisis, several groups have urged changes to the fuel standard or at least a temporary waiver of the ethanol quota, which annually requires more ethanol be included in the nation's fuel production. Among them are members of Congress, the U.N. Food and Agriculture Organization and the American Petroleum Institute.

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Beef output will slump to a nine-year low in 2013 after drought damaged pastures from Missouri to Montana, the U.S. Department of Agriculture estimates. The domestic herd is now the smallest since at least 1973, and retail prices reached a record last month, USDA data show. Cattle futures may rise 8.1 percent to an all-time high of $1.35 a pound in Chicago in the next 12 months, said Rich Nelson, the chief strategist at Allendale Inc. who has tracked the market for 15 years.

Feedlots are losing $300 a head this month fattening cattle for slaughter, after corn surged 61 percent since June 15, University of Missouri data show. JBS (JBSS3) SA, the largest beef producer, fast-food chain Wendy’s Co. (WEN) and Red Robin Gourmet Burgers Inc. are among those planning price increases. The USDA expects food inflation of as much as 4 percent in 2013, compared with an average of 3 percent since 2004. A United Nations gauge of global food costs jumped 6.2 percent in July.

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That same year, Congress enacted a Renewable Fuels Standard that called for the production of 500 million gallons of cellulosic ethanol nationally by 2012 as a stepping stone toward 16 billion gallons by 2022. Together with the 14 billion gallons of ethanol that’s already being derived from corn, that would displace more than 20 percent of the 138 billion gallons of gasoline that were then being consumed in the U.S.

But now five years have passed, the $70 million has all been spent, and there’s no sign of a commercial-scale cellulosic ethanol plant in Tennessee anywhere in sight. More than half of the $70 million went toward building a 250,000 gallon pilot refinery in Vonore. A fledgling UT subsidiary, Genera Energy, contracted with chemical giant DuPont to run the pilot plant, which commenced operation at the end of 2009.

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"This notice is in keeping with EPA's commitment to an open and transparent process to evaluate requests the agency receives under the Clean Air Act, and does not indicate any predisposition to a specific decision," said EPA spokeswoman Alisha Johnson.

Last week, governors from North Carolina and Arkansas filed formal waivers with the EPA, urging it to temporarily suspend the U.S. quota on ethanol made from corn because of this summer’s drought, which has driven corn prices higher, impacting livestock producers who rely on corn for feed.

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One top U.N. food official, José Graziano da Silva, has already called for an “immediate, temporary suspension” of the U.S. ethanol mandate in order to ease the pressure on world food prices. But how much would this actually help? Here’s one possible answer. A new paper (pdf) out from three agricultural economists at Purdue University finds that even a partial relaxation of the mandate could reduce corn prices by up to 20 percent next year. (It’s probably too late to seriously affect prices this year.) But, as always, there are complications involved that make these estimates uncertain.

Currently, the EPA’s Renewable Fuel Standard requires refiners to blend a certain amount of ethanol in with their gasoline. In 2013, this will require about 13.8 billion gallons of ethanol. Since corn ethanol is the most viable form of ethanol in the United States at the moment, this creates a hefty—and fairly inflexible—market for corn. And that causes corn prices to rise higher than they otherwise would.

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The House of Representatives has responded with $383 million in aid to cattle producers, paid for by cutting back soil conservation programs. In short, the plan would bail out businesses hurt by the current natural disaster — at the risk of rendering America’s farmland a bit more vulnerable to future ones.

There’s a better way. Instead of handing animal producers cash compensation for higher corn prices, why not take action to reduce prices in the first place? There’s not much the federal government can do about the weather, but it can adjust policies that artificially boost the demand for corn, sticking traditional users like livestock with higher prices, which they pass on to grocery shoppers. We refer to the Renewable Fuel Standard, the program that requires blending 13.2 billion gallons of corn-based ethanol into motor fuels this year.

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After two lean seasons, expectations for a bumper corn crop were high, according to Kona Haque of Macquarie, a bank. The bad years meant high prices. Planting began early and hit a record as corn won the battle for acres with soya and cotton. The weather began well. In May three-quarters of the corn was judged in good or excellent condition by America’s Department of Agriculture. Parched earth means that just a quarter of the crop now gets that rating, one of the lowest ever.

Corn prices have climbed (see chart) and hopes that low stocks might be replenished have been dashed. America’s crop goes in roughly equal measure to producing ethanol, feeding livestock and for export. All three will feel the pinch.

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As serious drought conditions continue moving across nearly two-thirds of the country, we are at a critical juncture where federal policy meets real world realities.

The Midwest corn crop pollinates in the first weeks of July. No rain means little or no pollination. As a result, fewer kernels form on each ear of corn. Even if the rain were to start falling again — and much more is needed than the storms and showers that reached Illinois recently — yields will be sharply reduced. A big part of the crop already is lost.

The looming shortage has sent prices for corn as well as soybeans to all-time highs at the Chicago Board of Trade. The farm belt is facing its worst disaster since the devastating drought of 1988.

What to do? Pray for rain, of course. But there is one important step that should be taken soon: TheU.S. Environmental Protection Agencyneeds to waive its requirement for using corn-brewed ethanol in U.S. motor fuels.

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Corn-growing areas have been hit especially hard. The result is that corn prices are at an all-time high, around $8 per bushel. Soybean products are also reaching high prices.

Consumers will be affected in three ways: at the grocery store, at the gas pump, and in their electric bills.

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The higher prices won't hit the grocery shelves for a few months, but when they do, consumers will be paying 10% to 15% more for milk, beef and poultry, farmers and economists said. But even rising retail prices may not be enough to sustain all California livestock and dairy producers.

"This is going have a huge impact on the industry, on California agriculture and on the public. It's going to hit people in the pocketbook," said Jonathon Beckett, a San Diego beef cattle nutritionist and consultant.

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Contrary to numerous studies that have shown ethanol to be hazardous to marine engines, the Environmental Protection Agency recently approved a plan submitted by the ethanol industry that effectively completes the last step in the regulatory process and allows E15 to enter the marketplace.

There are serious and well-documented human safety, environmental, and technological concerns associated with ethanol blends over 10 percent in recreational boat fuel tanks and engines. That means that anything above E10 can pose serious problems, including performance issues like stalling, corrosion leading to oil or fuel leaks, increased emissions and damaged valves, rubber fuel lines and gaskets.

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Conducted by Thomas Elam, Ph.D., president of FarmEcon LLC, an Indiana agricultural and food industry consulting firm, the study found that federal ethanol policy has increased and destabilized corn, soybean and wheat prices to the detriment of food and fuel producers and consumers.

The RFS, first imposed in 2005 and revised in 2007, this year requires 15.2 billion gallons of ethanol to be produced. Most of that amount is blended into gasoline at 10 percent.

“The increases we’ve seen in commodity prices are strongly associated with the RFS mandate,” said Elam. “At the same time, we haven’t seen the promised benefits on oil imports or gasoline prices. This means that while Americans are forced to pay more for food, they’re also not seeing lower prices at the pump; it’s a lose-lose situation.”

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The CARD researchers, Xiaodong Du and Dermot Hayes, attempt to determine the consumer benefit of ethanol by inferring what motor fuel prices would have been over the past decade had there been no increase in ethanol production. Ethanol now constitutes roughly 10% of the motor fuel used by U.S. passenger vehicles. Du and Hayes conclude that without ethanol, U.S. motor fuel supply would be significantly smaller and pain at the pump significantly greater.

This procedure, I argued, is ridiculous. First, it assumes that refiners are like deer caught in the headlights and do not respond to incentives. Even if motor fuel prices increase by up to $1.09/gal nationwide over a 10-year period, we’re supposed to believe refiners would not increase output and take advantage of this opportunity to sell more of their product at higher prices. But that’s exactly what refiners would do. In the process, supply would come back into balance with demand, pushing fuel prices down.

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Meanwhile, in the Sahel region of West Africa, as many as 17 million people are now at risk in a food crisis that stems from crop failure, drought and high food prices. In The Gambia alone, skyrocketing food prices mean an estimated 700,000 people are going hungry. The U.S. is the largest exporter of corn in the world, but the latest USDA estimates are that we will be exporting 300 million fewer bushels due to tight supply and higher prices.

What is the hidden ingredient in rising corn prices?

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So it came as a surprise — to say the least — when he learned that the tenant, Rodney R. Hailey, had told a federal agency that he would produce millions of gallons of biodiesel fuel there.

“Not out of here. Not out of a few plastic tubes,” Mr. Miller said, standing outside the tiny ramshackle building.

Mr. Hailey never made a single gallon of fuel. But that did not stop him from selling more than $9 million of fake fuel credits through a federal program critics call deeply flawed. Mr. Hailey, 33, was convicted in federal court on June 25 on 42 counts of wire fraud, money laundering and Clean Air Act violations. His prosecution highlighted one of several schemes connected to the energy credits known as renewable identification numbers, or R.I.N.’s.

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Finally the men whisk a secret weapon known only as "MPSS" aboard, a white metal cabinet the size of a large ice chest. Laid flat on the cockpit sole, it's below sight from curious eyes that may pass in another boat, or attempt to spy from shore.

Once loaded, two of the team begins rigging the MPSS to its attendant vinyl bag, the hoses tracing umbilicals to the exhaust system of the 175-hp Evinrude E-Tec engine on the transom. It takes more time to rig a battery of sensors — from water temperature and barometric pressure, to fuel flow and boat speed — but eventually and with little fanfare, the boat heads for a quiet creek that shall remain nameless. Once on the unmarked, one-mile-course track, the boat begins a repetitious navigation routine — up and back, up and back — as team members monitor the MPSS, now sucking samples of engine exhaust into the pouch.

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]]> 2012-06-18T19:19:14+00:00 http://smarterfuelfuture.org/resource-center/corn-price-increases http://smarterfuelfuture.org/resource-center/corn-price-increases#When:19:11:39Z Line graph shows that corn prices have trended upward since late 2005 (source: Congressional Research Service)

The Renewable Portfolio Standard requires that 36 billion gallons of renewable fuel be blended with petroleum-based products by 2022 under the Bush-era Energy Independence and Security Act of 2007.

Five years can be a very long time in US energy politics, said Charles Drevna, president of the American Fuel & Petrochemical Manufacturers, whose members include oil supermajors such as Shell, BP and Chevron.

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The RFS program is Environmental Protection Agency's system to assure that the amount of renewable fuel being used in motor fuel meets the requirements of the law. Believe it or not, the EPA monitors every gallon of renewable fuel in our motor fuel with a unique serial number called a Renewable Identification Number, or RIN. The EPA does not assign the RIN, nor does it maintain a registry for these numbers. And that's where the horror story begins.

Producers assign RINs -- credits that can be bought and sold like shares of stock. What's more, the EPA puts the burden on refiners and importers to ensure the credits they purchase are valid.

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Ready or not, here it comes.

At least that is the message from the ethanol lobby about E15, gasoline with 15 percent ethanol. Ethanol producers are in the process of clearing the final requirements to increase the amount of ethanol in our gas…

EPA has continued to ignore significant contrary evidence that shows E15 can cause engine damage, and that mound of evidence is growing. The Coordinating Research Council just released a study that shows E15 can cause engine damage even in new cars. I have contacted the EPA to determine if it still believes the fuel will not damage engines, and I am eagerly awaiting that response.

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"EPA's decision is arbitrary and capricious. We fail to understand how EPA can maintain a requirement to purchase a type of fuel that simply doesn't exist. Congress created a waiver provision in the RFS to address this exact situation," said AFPM President Charles T. Drevna. "If EPA isn't going to grant a waiver based on the agency's own data that shows the fuel is not available, when does the agency think it is appropriate to exercise its waiver authority? Today's ruling simply upholds EPA's imposition of a backdoor gasoline tax on American consumers."

The American Fuel & Petrochemical Manufacturers, American Petroleum Institute and Western States Petroleum Association jointly filed a petition on January 20, 2012, requesting that the Environmental Protection Agency waive the 2011 cellulosic biofuel volume mandate in its entirety due to a non-existent domestic supply of the fuel. EPA denied this petition on Tuesday, even though the Agency's own monthly summary of available volumes of cellulosic
biofuels showsthat no cellulosic biofuel was produced in the United States in 2011.

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“There are a minimum 5 million engines on the road today with characteristics similar to the ones that failed,” API Pres. Jack N. Gerard told reporters during a May 16 teleconference. “It’s not like we’re talking about prospective application. We’re applying this to the fleet that’s on the road today. We believe our estimate is conservative.”

The test results confirm that the US Environmental Protection Agency prematurely approved E15 for use in 2001 model year or newer cars and light trucks before CRC could complete its tests, added Michael J. Stanton, president of Global Automakers, and Mitch Bainwol, president of the Alliance of Automobile Manufacturers. “Policy goals are being advanced by putting consumers at risk,” Bainwol suggested. “Now we have material evidence that validates our concern.”

Former CRC Chairman Mike Leister, who also participated in the teleconference, said that stakeholders concerned with potential impacts from mid-ethanol fuel blends discussed the initial design of CRC’s research with EPA and kept the federal environmental regulator updated as the studies progressed. “One of the problems with EPA rushing to a solution was that it knew our research wasn’t complete yet,” he said.

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It is no surprise that a report bought by the corn ethanol corporations champions their industry. The Renewable Fuels Association claims are dubious at best.  The real cost of ethanol is being born by the American public and the environment.

Consumers are paying more at the grocery checkout line and suffering engine damage from the use corn ethanol. Ethanol is also costing us the land, water, and air that we – and our children – depend on. You can’t measure the cost of pollution at the gas pump.

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At the end of last year, Congress failed to renew the subsidies and tariff protection but retained the federal mandate requiring increases in the use of renewable fuels, such as ethanol, from approximately 13 billion gallons today to 36 billion gallons by 2022.

The mandate assumed that U.S. gasoline consumption would continue to increase rapidly, but the opposite has happened: Consumption has declined by more than 1 million barrels per day since 2006.

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This year’s six recipients recognized a problem within the recreational boating and engineering industry and rather than accept it, they sought out solutions. In the face of looming ethanol policies which would allow this detrimental fuel to enter the marketplace, these members collectively shared their expertise and successfully tested alternatives showing promise for the next generation of renewable fuels. Last summer’s on-water isobutanol testing resulted in the advancement of encouraging alternative to E15. The 2012 Environmental Achievement Awards recipients included:

• Rich Kolb, Engineering Manager, Emissions, Regulations, Parts & Accessories, Volvo Penta
• Jeff Wasil, Emissions Certification Engineer, Bombardier Recreational Products
• John Adey, President, American Boat and Yacht Council
• Brian Goodwin, Technical Director, American Boat and Yacht Council
• Dave Munz, Business Development Manager, Gevo
• Ryck Lydecker, Assistant Vice President, Government Affairs, BoatUS

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This report updates the findings in Du and Hayes 2009 by extending the data to December 2010 and concludes that over the sample period from January 2000 to December 2010, the growth in ethanol production reduced wholesale gasoline prices by $0.25 per gallon on average. The Midwest region experienced the biggest impact, with a $0.39/gallon reduction, while the East Coast had the smallest impact at $0.16/gallon. Based on the data of 2010 only, the marginal impacts on gasoline prices are found to be substantially higher given the much higher ethanol production and crude oil prices. The average effect increases to $0.89/gallon and the regional impact ranges from $0.58/gallon in the East Coast to $1.37/gallon in the Midwest. In addition, we report on a related analysis that asks what would happen to US gasoline prices if ethanol production came to an immediate halt. Under a very wide range of parameters, the estimated gasoline price increase would be of historic proportions, ranging from 41% to 92%.

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Depending on how old your car or truck is, you'll have to make sure you choose the right blend. If you make a mistake and put E15 in an older car, there's a good chance you'll run into big problems with your engine. And if you fill a gas can and use it in your lawnmower or outboard, be prepared to buy a new one soon.

In early 2011, the Environmental Protection Agency approved the corn ethanol industry's petition to increase the amount of ethanol that can be blended with gasoline. EPA approved E15 for use in newer cars and trucks – Model Year 2001 or later. That's a 50 percent increase in the amount of ethanol allowed in the widely available E10.

Every major automaker has warned that their warranties – even for newer vehicles – will be voided if drivers fill up with E15. Automakers and small engine manufacturers are so upset that they are suing EPA over the E15 decision. Click here to see the letters that major auto companies sent to Rep. Sensenbrenner (R-Wis.) before a July 2011 Congressional hearing (where EWG's Heather White testified about the problems with E15).

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The Environmental Protection Agency recently approved the use of E15 for model year 2001 and newer cars and trucks. However, the boating industry has found that fuel containing more than 10 percent ethanol causes severe damage to boat engines. While marine engines are not currently approved by the EPA for use with E15, misfueling at the pump is a danger for boaters unaware that E15 is not compliant with boat engines.

In fact, the Department of Energy (DOE) recently announced results from tests conducted on engines using E15 which revealed performance issues like stalling, corrosion leading to oil or fuel leaks, increased emissions and damaged valves, rubber fuel lines and gaskets. These results reinforced the recreational boating industry’s concern that E15 is not a suitable fuel for boat engines.

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The hardest hit is Third World countries that rely partially on buying grain from American farmers to feed poor people.

It is also hitting American consumers in the pocketbook. It is particularly noticeable as Thanksgiving approaches. Corn is the primary feed for turkeys. Ethanol subsidies have diverted much of the crop into fuel production essentially tripling the price of feed for turkeys. That puts the squeeze on turkey growers and ultimately you the consumer.

It’s the classic lose-lose scenario from the government meddling with the marketplace believing they know better than the private sector. Not only are you footing the bill for ethanol subsidies but you are paying more for food because those subsidies are being used to give farmers better prices than the market allows.

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Mr. Hilbert’s testimony highlighted the damaging effects that E15 has on marine engines, and noted that more testing is needed to further identify how E15 will affect engines and fuel systems under various conditions. Mercury’s testing showed significant problems with outboard engines, including severe damage to engine components and an increase in exhaust emissions, reinforcing the recreational boating industry’s concern that E15 is not a suitable fuel for marine engines.

The Subcommittee heard testimony from representatives of the EPA, the American Petroleum Institute, Gevo, the Energy Biosciences Institute, the University of Wyoming Institute of Environment and Natural Resources and the National Petrochemical & Refiners Association. Subcommittee Chairman Andy Harris (R-MD), received David’s testimony favorably and the committee members had no questions for Mr. Hilbert after the research was presented. The testimony and accompanying photos will be printed in the official record of the hearing.

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