The federal government’s Renewable Fuel Standard, aka “the ethanol mandate,” is running on empty when it comes to the goals of lowering gasoline prices and reducing greenhouse gases, according to a new Government Accountability Office study. The congressional watchdog agency found that the RFS program, administered by the Environmental Protection Agency and the U.S. Department of Agriculture, has probably driven “modest gasoline price increases” outside the Midwest corn belt. Also, said GAO, “The RFS has likely had a limited effect, if any, on greenhouse gas emissions.”
In addition to the federal RFS program, several states implemented ethanol mandates before the federal program. All are politically popular among corn farmers across the country. The GAO’s analysis also found decreases in gasoline prices in the Midwest and increases elsewhere.
Congress established the ethanol mandate in 2005 and expanded it in 2007. The most common biofuel used is corn-starch ethanol, distilled from the natural sugars in corn. EPA uses “renewable identification numbers,” or RINs, to regulate compliance with the mandate to blend alcohol into refined petroleum. Several issues have arisen around the RINs program, GAO noted, including effects on small refiners and price volatility.
One problem with the RFS program has been the failure of alternative biofuels to come into the market to compete with corn. Those with long memories may recall President George W. Bush waxing optimistically about ethanol from “switchgrass.” GAO noted that “advanced biofuels, which achieve greater greenhouse gas reductions than conventional corn-starch ethanol, have been uneconomical to produce at the volumes required by the RFS statute so the Environmental Protection Agency (EPA) has waived most of these requirements.”
The Institute for Energy Research commented on the GAO analysis and the rationale for the RFS: “Energy independence and national security were the arguments used for the passage of the initial ethanol mandate in 2005 and its 900-percent increase two years later. It was believed that the United States needed to displace foreign oil imports with domestic fuel for our economic and national security. As it turned out, the combination of horizontal drilling and hydraulic fracturing vastly changed the United States and the world and turned the foreign oil dependency of 2005 and 2007 into a moot point. The United States is now the world’s largest producer of oil and natural gas, and is becoming an exporter of both. Further, ethanol was already being used by refiners as an oxygenate and fuel extender; forcing mandates for additional ethanol use at levels far greater than the demand for transportation fuels could handle did an injustice to the American public.”
— Kennedy Maize