Is this the Worst Policy in America?

July 2, 2014

Even the government thinks so…

In late June, the non-partisan Congressional Budget Office (CBO) released a report detailing how much full implementation of the Renewable Fuel Standard (RFS), America’s ethanol mandates policy, would cost.

For the first time since the ethanol mandate was enacted, a government agency has confirmed what the refining industry has said for years…forcing ethanol into our fuel supply will increase gas prices.

How much? Up to 9 percent—or 26 cents—per gallon in just three years. Price increases of any size have impacts, but a jump that substantial is bound to create ripples throughout our economy and in Americans’ wallets.

Beyond the increase in gas prices, the CBO laid out some significant challenges to actually meeting the requirements of the RFS.

“The rising requirements in EISA would be very hard to meet in future years because of two main obstacles, which relate to the supply of cellulosic biofuels and the amount of ethanol that older vehicles are said to be able to tolerate.”

As we’ve mentioned before, cellulosic biofuels made from non-food supply sources do not currently exist and relying on them to meet the future mandate is unlikely. The chart below, from the CBO report, shows exactly how far away we truly are:

Notice even the government believes we’ll barely eke out any gallons of cellulosic biofuels by 2022, let alone the nearly 15 billion gallons mandated.

As for the use of higher ethanol blends in “older” cars, E15 is only approved for use in vehicles built after 2001. According to AAA, 95 percent of automobiles on the road today aren’t designed to run on gasoline that contains more than 10 percent ethanol.

And the CBO is hardly the only governmental organization taking issue with this broken government policy:

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

And yet, the American people are still waiting for action from Washington. Tell your friends and family to support reform of this broken policy.