Ethanol: Bad Environmental Policy?

by Ed Burke, Dennis K. Burke Inc.

Just about the same time as the U.S. 

Environmental Protection Agency (EPA) announced plans to reduce ethanol-blending goals in the Renewable Fuels Standard (RFS), media attention turned to the ethanol boom, its impact and ethanol’s questionable environmental benefits.

In one eye-opening investigative article, the Associated Press (AP) found that ethanol hasn’t lived up to some of the government’s clean-energy promises, and the story began drawing fierce response from the ethanol industry.

The report offered its readers vivid descriptions of the damage occurring to marginal farmland, grassy hillsides plowed into crop rows, the millions of acres of conservation land lost, while streams and rivers are being polluted and fouled by fertilizer runoff. There is little question that ethanol production has had many negative environmental impacts.

Ethanol Loses Support

The consequences are so severe that environmentalists and many scientists have now rejected corn-based ethanol as bad environmental policy. Over the past few months, dozens of renowned groups have publicly withdrawn their support for the corn-ethanol portion of the RFS.

The ethanol industry says AP is wrong and calls the reporting a “smear campaign.” They dispute several of AP’s findings and conclusions. AP responded back in an article that their investigation was based on government data, interviews and observations. It highlights what many researchers have published in peer-reviewed journals and is consistent with reports to Congress by the Environmental Protection Agency about ethanol’s environmental toll.

The ethanol folks pointed out that soil erosion, water pollution and other consequences happen with most industrialized corn farming, whether the harvest is used to make ethanol, used as livestock feed, or used in food products.

They also note that the vast majority of the land was former farmland taken out of production under the Conservation Reserve Program (CRP), an initiative they say is only partly about protecting sensitive land but also about boosting farm prices.

And finally, they recognized that higher corn prices may have driven farmers to put idled land back into production, but so have reductions in the CRP program, the drought last year, and shifts in global grain demand.

A major concern the article discusses is possible manipulation of data to ensure that corn ethanol met a policy test of being 20 percent “greener” than gasoline. After an initial analysis put the figure at 16 percent starting in 2022, the EPA changed its calculations to raise yield forecasts and lower price predictions, both of which would raise corn ethanol’s benefits relative to costs. AP says this was done under pressure from industry lobbyists.

Senate Targets Ethanol

In December, a bipartisan group of Senators introduced a bill to eliminate the ethanol mandate of the RFS. Senator Dianne Feinstein of California, Senator Tom Coburn of Oklahoma, and eight other cosponsors introduced The Corn Ethanol Mandate Elimination Act of 2013.

“Under the corn ethanol mandate in the RFS, roughly 44 percent of U.S. corn is diverted from food to fuel, pushing up the cost of food and animal feed while damaging the environment,” Senator Feinstein said. “Oil companies are unable to blend more corn ethanol without causing problems for automobiles, boats and other vehicles.”

Feinstein noted that the bill would leave mandates for non-corn ethanol advanced biofuels untouched. “I strongly support requiring a shift to low-carbon advanced biofuels, including biodiesel, cellulosic ethanol and other revolutionary fuels,” she added. “But a corn ethanol mandate is simply bad policy.”

“This misguided policy has cost taxpayers billions of dollars, increased fuel prices, and made our food more expensive,” Senator Coburn said. “Eliminating this mandate will let market forces, rather than political and parochial forces, determine how to diversify fuel supplies in an ever-changing marketplace.”

“The proposal has strong support from the prepared food industry,” Feinstein said, “including dairy; beef; poultry; oil and gas; engine manufacturers; boaters; hunger relief organizations; and environmental groups.”

Feinstein and Coburn previously teamed up in 2011 to cosponsor an amendment that ended the ethanol industry’s 45-cents-per-gallon tax incentive and its 54-cents-per-gallon import tariff.

Will Ethanol Go Away?

While it is unlikely that ethanol will go away, volume levels will probably be limited to stay below the blend wall. The administration believes supporting corn ethanol is the best way to encourage the development of biofuels that will someday be cleaner and greener than today’s. Officials fear that pulling the plug on ethanol might mean killing any hope of these next-generation fuels being developed.

In the end, the reality is that ethanol mandate is a broken policy that needs reform. What Congress does with the RFS over the next few months will tell us about their political resolve to fix unworkable mandates and costly government regulations.

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