The Huffington Post: The Ethanol Mandate Needs to Be Reformed

October 14, 2013

Mike Lux, October 11 – I have written before about the market manipulation going on in ethanol, a classic case of Wall Street speculators driving up prices for everyone else, and using government subsidies to do it. Beyond the market manipulation, though, progressives like me are quickly coming to the conclusion that the entire Renewable Fuel Standards (RFS) program that mandates more ethanol in the nation's fuel supply may need to be dramatically reformed or even ended. Sold in the beginning as an environmental idea, it has become rife with problems of all kinds, including major environmental concerns, and is now just a fat corporate subsidy and a tool for Wall St speculators to make money off of.

An increasing number of lawmakers realize its demands are unworkable and driving up the price of food and gas. The most recent Member of Congress to pile on is strong progressive Rep. Peter Welch (D-VT), who called the ethanol mandate a “flop” this week and rightfully argued for serious changes to the program. The fact that such a great progressive Democrat is calling for an overhaul to a clean energy law underscores just how flawed the RFS program has become and how badly it needs to be revised.

The ethanol mandate was originally intended to spur the development of renewable energy sources by requiring an increasing amount of ethanol be mixed into the nation's gasoline supply over time. If energy companies such as oil refiners failed to blend enough ethanol into their fuel, they could compensate for the shortfall by buying ethanol credits known as RINs (renewable identification numbers) — a type of commodity sold and traded in a specialized market.