Environmentalists and Energy Advocates Agree: Ethanol Reform Now

We all expect to pay a price for missing deadlines—fail to pay a ticket on time, and you may find a warrant out for your arrest. But the Environmental Protection Agency (EPA) can apparently miss deadlines with impunity.

For the past two years, the EPA has failed to meet the statutory deadline under the Renewable Fuel Standard (RFS), requiring the agency to tell refiners how much ethanol to blend into the nation’s motor fuels.

In November 2013, the EPA attempted to announce the proposed 2014 blend levels, which by then came months past the legally mandated deadline. The EPA surprised and pleased RFS opponents when it utilized its authority by taking market conditions into consideration to adjust levels. The agency set the proposed 2014 standard to a level lower than 2013’s, even though the law requires increasing amounts. Ethanol producers, expecting the usual uptick, loudly opposed the reduction. They made so much noise, the EPA agreed to reconsider. To date, the 2014 standards have not yet been announced.

Then, on November 21, the EPA announced it would make a decision next year on how much ethanol refiners had to add to gasoline this year. Yet, if refiners don’t meet the unknown requirement, they get fined. That’s akin to handing out the class syllabus after the students have failed the final exam.

With the goal of reducing foreign oil imports, Congress enacted the RFS in 2005 and revised it in 2007—which also provided incentives to America’s fledgling ethanol industry. At the time, gasoline demand was rising to an all-time high and oil imports comprised more than 58 percent of U.S. oil consumption. No doubt Congress believed it was saving American consumers from their addiction to oil.

Then the world changed. The U.S. economy plunged into a terrible recession, unemployment soared, and gasoline demand fell sharply. Meanwhile, advanced drilling technologies, including the long-used hydraulic fracturing and newer horizontal drilling, began producing oil and natural gas from U.S. shale formations—previously uneconomic to develop—leading to America’s 21st-century energy boom.

Today the U.S. stands as the world’s largest natural-gas producer, projected to pass Saudi Arabia as the number-one oil producer. With crude-oil supplies flooding the market, prices have been cut in half. Although fears over foreign-oil dependence have abated, the U.S. remains stuck with an outdated, unworkable, and even harmful—to vehicles, engines, and the environment—ethanol mandate.

Consider just some of the RFS’s flaws.

The law requires refiners to cap their blending of corn ethanol and use more cellulosic biofuels. Never mind that very little cellulosic biofuel has ever been produced—even according to EPA’s own data. But that fact hasn’t prevented the EPA from levying millions of dollars in fines against refiners for failing to use the phantom fuel. It’s kind of like receiving a bill for something you cannot buy because it doesn’t exist, but you’re being charged anyway.

Then there is the “blend wall” problem. With less gasoline sold than Congress anticipated, refiners cannot add ever-rising amounts of ethanol to gasoline without exceeding E10—the fuel consisting of 10 percent ethanol and 90 percent gasoline sold virtually everywhere in the country today. To get around the blend wall issue, the EPA granted a “partial waiver” allowing the sale of E15, a fuel blend containing up to 15 percent ethanol for model-year 2001 and newer vehicles.

The EPA’s quick fix made a bad situation much worse. Ethanol levels higher than 10 percent can damage or destroy vehicle engines, according to a study conducted by the well-respected Coordinating Research Council. Automakers are voiding warranties and refusing to be held responsible for mechanical problems caused by fuels containing more than 10 percent ethanol.

Ethanol contains less energy than gasoline, forcing motorists to fill up more often, thereby causing more consumer expenditures. Ethanol production has driven up food prices here and abroad. Additionally, some studies indicate ethanol usage increases greenhouse-gas emissions.

Then politics entered the scene. Rumors flew that the EPA delayed the announcement of the 2014 blend levels to help Rep. Bruce Braley (IA-D) in his Senate bid. Braley pushed for an increase in the proposed levels and hoped to influence the White House to raise the targets. Politico quoted Braley saying: “Voters in Iowa look at where I stand on this issue and where my opponent stands, who’s supporting me in this campaign and who’s supporting [Ernst].” The Politico story states: “Iowans say wavering on corn ethanol once would have been certain political suicide in a state where 90 percent of the land is farm acreage. So Braley sought to capitalize on Ernst’s expressed qualms about big government, portraying her as someone Iowans can’t trust to fight for them.” Yet, Ernst, a Republican, won the Senate seat formerly held by Democrat Tom Harkin.

The EPA’s unwillingness to do its job by setting ethanol volumes—along with ethanol’s loss of “political heft”— should provide the impetus for ending the complex and wasteful RFS program. Ethanol plays as a rare topic where environmentalists and energy advocates agree. As soon as the new Congress convenes in January, it should give the RFS an “F,” and reform, revise, or repeal it.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column.