Stop the Ethanol Madness

By Mario Loyola
November 23, 2019

The mainstay of the Renewable Fuel Standard is an unmistakable social and environmental failure. Why does it persist?

The idea of requiring the nation’s gasoline supply to contain a certain amount of renewable biofuel was born in a short-lived doomsday fad of the 1970s. With experts warning that the world was quickly running out of oil, the shocks of ’73 and ’79 led President Jimmy Carter to call for wartime-style rationing of fuel and other draconian measures to avoid a “national catastrophe.” His proposals, fortunately, didn’t get much further than a small subsidy for corn ethanol.

Just a few years later, with its market share under assault from new non-OPEC oil producers, Saudi Arabia suddenly doubled production. Oil prices crashed around the world, and a decades-long oil glut ensued. So much for that doomsday fad.

As a way to replace dwindling reserves of oil, ethanol subsidies had a certain brutal logic, especially if oil prices were going to keep rising with no end in sight. But as a way to address climate change, the program never made any sense. Corn ethanol may well be worse for the climate than fossil fuels, and the program does significant damage to both the economy and the environment. Its sole beneficiaries are large agricultural corporations—and the politicians who serve them.

Corn ethanol is the mainstay of the nation’s Renewable Fuel Standard, which was created in 2005 when gasoline prices finally rose again, though that price shock, too, proved fleeting. The RFS creates a complex web of targets for both corn ethanol and “advanced biofuels.” To qualify as “advanced,” biofuels such as biodiesel (from sources such as palm oil and recycled cooking oil) and futuristic cellulosic ethanol (from sources such as prairie grass and tree bark) must have a significantly lower greenhouse effect than corn ethanol. The RFS program created both a gradually rising biofuel mandate, and within that mandate, a gradually rising proportion of advanced biofuels (particularly cellulosic ethanol) relative to corn ethanol, such that advanced biofuels are supposed to make up the majority of the mandated volume by 2022.

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