Gerard Scimeca – Chairman, CASE

October 23, 2018 – https://bit.ly/2NZ3Sy4

In his proposal to lift restrictions on year-round sales of gasoline with higher blends of ethanol, President Trump argued that, corn farmers and renewable fuel producers need new market opportunities and sources of demand.

But the latest ethanol plan looks a lot like previous ethanol plans: ramp up production of ethanol despite concerns that it leads to more air pollution, degrades water quality, and destroys prairie by encouraging the production of corn.

Missing from Trump’s plan was any explanation of how motorists would gain from gasoline with higher blends of ethanol. The vast majority of cars on the road are not designed to use E15, which can damage engines and fuel systems.

At its inception, the ethanol program was promoted as a means to reduce the nation’s reliance on foreign oil. The thinking was, let’s replace oil with homegrown corn ethanol. But that was back in 2005, when U.S. dependence on imported oil had reached 60.3 percent of US oil consumption and politicians were warning that the level of imports would continue to rise as domestic resources dwindled. They were wrong.

Instead, domestic oil production has boomed over the past ten years and imports are down to 19 percent, thanks in large part to technological innovations that have enabled companies to produce hard-to-reach oil and natural gas in shale formations. The U.S. is now the world’s No. 1 oil and gas producer.

You’d think the Administration would have scaled back the ethane mandate to reflect the reality of reduced imports. Yet the Renewable Fuel Standard, which sets volumetric requirements for ethanol, rising to 36 billion gallons in 2022, has remained intact. The new change would allow summer gasoline to contain more ethanol – potentially up to 15 percent. This market-distorting policy will harm American consumers and taxpayers.

Today, 40 percent of the nation’s corn crop is consumed in the production of ethanol. Because corn is the most common animal feed and has many other uses, consumers pay more for scores of food products, including milk, cheese, beef, poultry, pork, corn-based sweeteners and cereal. What’s more, the ethanol quota diverts valuable cropland away from other agricultural uses and increases feed prices for cattle and dairy farmers. It’s estimated that a family of four pays more than $2,000 per year in extra food costs.

Another unintended effect from the increase in ethanol production is that motorists using E15 will get even fewer miles per gallon than they would with E10 or gasoline. They will have to fill up more often to go the same number of miles, which means higher costs at the pump.

When Congress approved the Renewable Fuel Standard in 2007, it was presumed that corn ethanol would be supplanted by cellulosic ethanol, made primarily from switchgrass and wood chips. But refineries producing cellulosic ethanol never got off the ground, despite government assistance.

Among the negative consequences of the increase in production of corn ethanol have been conflicts between land for fuels and land for food, water scarcity, loss of biodiversity, and nitrogen pollution through the excessive use of fertilizers.

And if ever there was a question about the impact of ethanol, it was dispelled by evidence that its climate benefits are nil. A study by the International Institute for Sustainable Development shows that replacing gasoline with ethanol has little or no effect on carbon emissions.

Instead of pretending that ethanol is necessary, Congress should incorporate some common sense into energy policy by repealing the Renewable Fuel Standard. Clearly, the longer the need for a change in policy is ignored, the bigger will be the consequences for consumers.