Tag Archives: ethanol

Cruz’s Victory Against Ethanol Cartel

Most presidential candidates in the past would go to Iowa, the first state to cast a ballot for President of the United States, and proudly, boldly support ethanol and the Renewable Fuel Standard (RFS) ‒ even if they talked badly about it everywhere else in the nation.

However, Senator Ted Cruz set himself apart from all the others. Cruz voted to repeal the Renewable Fuel Standard. He stood up to the ethanol cartel, while he was campaigning very hard in Iowa. In response, the cartel mobilized an army to fight him, and they were defeated Monday night when he took first place in the Iowa Caucus.

The Renewable Fuel Standard (RFS) is a law requiring traditional fuel to have increasing blends of ethanol and later, other biofuels. However, the RFS plan has already failed.

 

Renewable Fuel Standard Mandates, or Not?

The Renewable Fuels Standard (RFS) provisions of The Energy Independence and Security Act of 2007 (EISA), mandates an increasing blend of renewable products into our domestic fuel supply. The law amends the Clean Air Act, and allows for an initial blending of food-based ethanol (corn), beginning in 2008. In subsequent years, the blend was to transition towards satisfying the annually increasing volumes with non-food “second stage” cellulosic ethanol, referred to as RFS2. The cellulosic, or advanced biofuels, are derived from biological materials such as wood shavings, leaves, corn cobs and grasses. In addition to the blend provisions, the law requires the program to achieve a 20% reduction in greenhouse gas emissions. Unfortunately, the costly experiment has failed to meet several goals, including air quality and the defined blend requirements.

To explain, in 2008 Congress mandated the EPA to set the RFS at a 10% blend of corn ethanol. Drivers then began to see labels informing them of E10 in fuel pumps. By 2010, the law states we were to move towards the use of non-food products (the second-stage RFS2), to fill the increasing blend requirements. However, in 2010 and 2011, no cellulosic biofuel was available to fill the volume requirements. Similarly, in 2012 and 2013 the available production did not amount to 1% of the mandated levels. As a result, the EPA adjusted the blend formulas allowing for first stage corn-based ethanol to fill the void.

In 2011, the EPA approved the blend increase to E15 (15% ethanol). An increase mandated to include cellulosic renewables (non-food) as opposed to corn. Now, several years into the program, cellulosic biofuels are still not available. Nevertheless, the EPA should not continue to adjust the volumes between ethanol and biofuels. It was at the onset of the program in 2007 that the Department of Energy (DOE), assured the taxpayers cellulosic ethanol would be ready and cost competitive with gasoline by the year 2012. Again, yet another goal the program failed to meet. Incidentally, that promise accompanied an astounding $385 million federal investment in six privately owned plants.

Unfortunately, at this time technological realities and market fundamentals simply do not support large-scale production of cellulosic biofuels and the industry is not near capable of meeting the RFS2 mandates. The creation of a law does not guarantee that science and economics will cooperate. As we look at the legal requirements and limits of alternative fuels made from wood chips and corn cobs, one thing is wholly apparent. We can’t get there from here.

So then, where are we? In regards to the ethanol mandate, we are quite possibly near the end. It was a poorly drafted piece of legislation that is not sustainable without government backing. Aside from corn farmers and their lobbyist, there is little support for continuing the project. Unfortunately, and unavoidably, the same corn farmers who benefited from the program will suffer the greatest financial impact upon its demise.

USDA and States to Spend $210 Million on Fuel Pumps

On May 29th, the United States Department of Agriculture (USDA) announced $100 million in grants offered through their Biofuel Infrastructure Partnership (BIP) program. According to Secretary of Agriculture Tom Vilsack, the move is to make renewable fuel options more available to American consumers. The program is a 1:1 partnership with states to build fueling stations and purchase blender pumps for E15 and higher. The preliminary spending tally estimates $210 million for 5,000 pumps at 1,400 fueling stations in 21 states.

This latest money toss is yet another multi-million dollar outlay resulting from the Renewable Fuel Standard (RFS), as mandated by the 2007 Energy Independence and Security Act (EISA). The mandate requires gasoline to be blended with renewable fuel sources at incremental increasing levels.

The original RFS mandated level was 10% ethanol or E-10. The next mandated level, 15% ethanol or E-15, is a blend level the EPA labels to be used only in Flex-fuel passenger vehicles, model years 2001 and newer. The label goes on to state, “Do not use in other vehicles, boats, or gasoline-powered equipment. It may cause damage and is prohibited by Federal law”. Still, the EPA wants to make even higher blend levels available, even if that means taxpayers are to fund the necessary infrastructure.

Unlike the traditional pumps where a consumer makes the fuel choice of diesel, unleaded, or octane levels, the government has decided to fund blender pumps offering a choice between ethanol or even more ethanol. Even though the overwhelming preference of consumers, environmentalist, economists, most ag sectors and automakers is E-0, an option not found on the new pumps.

Though extensive studies with science-based evidence prove the damage ethanol contributes to the environment and engines, along with the real damage to a market-based economy, federal agencies continue to dig deeper into the ethanol quagmire. Even the Government Accountability Office (GAO) found the RFS costs outweighed its benefits and criticized the EPA’s economic analysis of the RFS as intentionally misleading. In a 2014 report to Congress, the GAO exposed the agency’s false reporting of the program’s costs stating, “EPA estimated net benefits of the mandated volumes ranging from $13 to $26 billion.” However, the EPA did not include the infrastructure costs (such as this latest $100 million) in their calculations. An expense the EPA estimates to total an astounding $90.5 billion.

 

The Failure of U.S. Biofuels Program

Ending a relationship is never easy, even one with a proven history of broken promises, twisted logic, weak justifications and financial exploitation. Such is the bond between the American taxpayer and the domestic ethanol industry. In the beginning, statements of common goals sparked hopeful enthusiasm. Many eagerly supported the romantic notion of growing our way to energy independence and an American-led green-based movement towards world prosperity. But, alas, the thrill is gone, and the truth exposed. The once proud, almost pompous, biofuels sector is struggling for justification.

The affair began in 2007 with the Energy Independence and Security Act (EISA). Contained within the act is the Renewable Fuel Standard (RFS) provisions that sets forth incentives for the development of biofuels such as plant-based ethanol and biodiesel. At the time, Bush had committed to the goal of ending American’s addiction to fossil fuel. The original promise was a reduced dependency on Middle Eastern oil, cleaner air, a boon to agriculture and reduced fuel costs for consumers.

Unfortunately, ethanol has failed to live up to its promised benefits. Recent low prices at the pump have exposed its life-support dependency on the government. Although direct subsidies have expired, ethanol producers continue to benefit from other financial incentives and federal mandates. A study by the NARC Consulting Group calls the program an economic death-spiral and discloses its many flaws. Yet, industry groups rally for maintaining, even increasing, RFS percentages in the face of mounting evidence of the program’s failure. Still, in a recent rule change proposal, the EPA published a plan to amend the mandates.

The statutory requirement to blend government-supported biofuels with free-market fuels is market manipulation. If the value of ethanol and other biofuels were legitimate, forced consumption, through the RFS, would not be necessary. Congress should end this failed relationship and costly experiment. Let the free market drive innovation and job development. Below, are but a few of the adverse effects of the RFS:

  • disruptive to agriculture markets
  • increases food costs
  • rife with fraud
  • lacks self-sustainability
  • burdens Taxpayers
  • environmental damage
  • violates free-market principles

More Tax Money for Obama’s Green Dreams

From Merrill Matthews at the Institute for Policy Innovation:

President Obama reportedly will announce on Friday that he will waste another $100 million taxpayer dollars in his never-ending quest to push consumers to embrace his green dreams.

Though he won’t actually put it quite like that, that’s the upshot of his message.

The $100 million is to expand special fuel pumps, called “blender pumps,” that allow drivers to choose how much ethanol they want in their gas tanks. If consumers could choose zero, at least it would represent a real choice, but don’t bet on that.

Consumer Reports says that about 70 percent of gasoline has a 10/90 blend, that is, 90 percent gasoline and 10 percent ethanol, known as E10.

Ethanol advocates — primarily the farmers who grow the corn and the processers that turn it into ethanol, both of whom profit greatly from the product — claim that newer cars can take a blend ratio of E15. And some flex-fuel cars can go significantly higher.

But why would most people do that, since the higher blends of ethanol appear to reduce miles per gallon?

When Consumer Reports compared the gas mileage of E10 to what the ethanol industry is really pushing, E85 (85 percent ethanol), it found a significant reduction in miles per gallon. “When running on E85 there was no significant change in acceleration. Fuel economy, however, dropped across the board. In highway driving, gas mileage decreased from 21 to 15 mpg; in city driving, it dropped from 9 to 7 mpg.”

In addition, many environmentalists who once encouraged ethanol expansion have begun to back off that support.

Obama’s predictions about the adoption and benefits of his environmental policies have been every bit as bad, if not worse, than his predictions about his health care law. He predicted there would be a million electric vehicles on the road by 2015; there’s actually about 286,000. His efforts to push high-blend ethanol are likely to be no better.

There is nothing wrong with a transition to higher-blend vehicles — if that’s what consumers want. But that is not this administration’s approach. What matters is what the president thinks is good for you, whether he would ever use it or not, and to back his vision with your taxes.

 

Government Subsides Help Distort Science

A $500,000 study released this past Sunday in the peer-reviewed journal, Nature Climate Change, detailed how corn-based biofuels release seven percent more greenhouse gases in the initial five-year time frame compared with conventional gasoline. The study which was paid for by the federal government found that regardless of how much corn residue is taken off the field, the process contributes to global warming.

But administration officials who have devoted more than a billion dollars of taxpayer funds as well as the biofuel industry disagree. DuPont claims that the ethanol it will produce will be 100 percent better than gasoline in terms of greenhouse gas emissions. The Environmental Protection Agency (EPA) says the study “does not provide useful information relevant to the life cycle greenhouse gas emissions from corn stover ethanol”.

But there are reasons to doubt DuPont and the EPA. DuPont is getting billions in subsidies to produce biofuels. Federal subsidies help its stock price; the company would be foolish if it did not defend biofuels. Meanwhile an Associated Press investigation last year found that the EPA’s analysis of corn-based ethanol failed to accurately predict the environmental consequences. California regulators earlier declared that corn ethanol would not reduce global warming and may in fact make it worse. Other federal studies have reached the same conclusion. David Tillman, a researcher at the University of Minnesota who has researched biofuels emissions from the farm to the tailpipe, says the recent study is the best he has seen on the issue.

This controversy highlights several problems. Despite claims to the contrary, politics seem to play a part at the EPA. The EPA could have simply released a statement that research in this area is still developing and it is sticking with its initial conclusion that biofuels improve the environment. By issuing such a strong rebuke, it seems the organization is not open to new information. Real scientists know new discoveries come along all the time. Scientists do not offer blanket statements, but politicians do.

Further, no matter how well intentioned, subsidies distort the market. Reducing carbon emissions is a good goal, but when government picks a winner everybody else loses. We do not know if there is a better solution that corn-based ethanol. We do not know if the EPA is investing in real science or attaching itself to its preferred winner. The EPA’s role should be to judge the best solution the private sector develops. When the EPA provides subsidies to one technology over another, taxpayer money and possibly scientific integrity are lost forever.