January 10, 2013

Keep the mandate, but shift to biofuels



The federal requirement for use of ethanol in gasoline was widely criticized in 2012. With a prolonged drought that reduced the production of corn used to make ethanol, the mandate drove up corn prices and the cost of livestock feed, and contributed to global food scarcity.

In response, many called for a temporary suspension of the ethanol mandate, but it wasn’t to be.

The U.S. Environmental Protection Agency said it could not waive the requirement because Congress permitted such an action only if the fuel rule “severely” harms the economy. EPA concluded that was not the case in 2012.

The mandate, called the Renewable Fuel Standard, dates back to 2005, when it was created as part of the Energy Policy Act. Congress expanded the requirement in 2007 with passage of the Energy Independence and Security Act.

The fuel standard after 2007 required a gradual increase in the volume of fuel derived from renewable sources to be blended into transportation fuel – rising to 36 billion gallons by 2022.

Congress specified a year-by-year quota for gallons of ethanol-blended fuel, with specific mandates for corn-based ethanol and fuel made from other sources. The target for corn ethanol is 15 billion U.S. gallons by 2015.

The 2007 act also called for the EPA to work toward reduced emissions of greenhouse gases from fuel. So the mandate has two related goals: reducing dependence on imported oil and lowering emissions linked to climate change.

U.S. dependence on imported oil has declined substantially, reflecting in part the recent economic downturn, but also improving vehicle fuel efficiency and increased domestic production of oil.

The result is that in 2012 the U.S. imported an estimated 40 percent of the oil it used compared to over 60 percent at its peak in 2005. The nation’s greenhouse gas emissions declined as well for some of the same reasons as well as a switch to use of natural gas.

Given these results, the renewable fuel mandate is a successful policy, right? Not entirely.

The program remains inflexible and relies too much on use of corn. Both the production of corn and the ethanol conversion process are highly energy intensive and have undesirable environmental effects.

As it is now designed, the ethanol policy benefits farmers and the ethanol industry more than it does the public. A further problem is that with rising vehicle fuel efficiency, projected to increase markedly in the years ahead, we now produce more ethanol than needed. This is one reason why ethanol manufacturers have pressed to increase the amount of ethanol allowed in fuel from 10 percent to as much as 15 percent.

What should we do? Congress could rewrite the renewable fuel mandate in a way that discourages the use of corn to make ethanol and encourages production of renewable fuels made from non-food sources, such as agricultural residues and wood chips.

There is a strong potential over time for such biofuel production as conversion processes improve and doing so also could add jobs and improve the economy.

Given these alternatives, we should keep the federal ethanol requirement for its desirable goals of reducing reliance on imported oil and limiting greenhouse gas emissions. But we also should change the rules gradually to move away from use of corn.

Contact Kraft, professor emeritus of political science and public and environmental affairs at the University of Wisconsin-Green Bay, at kraftm@uwgb.edu.

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