Forbes: It’s Time To Repeal The Renewable Fuel Standard

April 18, 2013

Robert Bradley Jr., April 17- But we’re not living in that world. The U.S. Environmental Protection Agency (EPA) is gearing up to expand a destructive program that is criticized at both ends of the ideological divide.

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.