The joke that is the renewable fuel standard
Blessed with a vast supply of diverse natural resources, the United States government still insists on wasting its and taxpayers time on ethanol. Unfortunately, the worst is yet to come. Starting next year the Renewable Fuel Standard (RFS) i.e. the ethanol mandate will require Americans to use more than 14 billion gallons of corn-based ethanol for their vehicles. Putting aside for a minute that ethanol is more expensive and less efficient than regular gasoline, this law has been nothing more than an accommodation to special interest whose ethanol experiment has been a failure to the American consumer.
Getting Less For More
Implicit in the ethanol mandate is the reality that without such a policy, Americans would not use nearly as much ethanol—and for good reason. During most of the past 30 years, ethanol has been more expensive than regular gasoline. Furthermore, ethanol contains one-third less energy than gasoline. This means that if you put one gallon of gasoline in your car and one gallon of ethanol in your friend’s identical model, you’ll go 15 percent farther than your friend. Responding to an increase in the RFS mandate, some automakers are even installing larger gas tanks in vehicles.
Wait, there’s more
If ethanol is more expensive and less efficient, it is easy to see why the fuel necessitates a mandate but hard to understand Congress’s justification for doing so. Unable to stand on economic grounds, ethanol proponents make claims about reductions in foreign oil and greenhouse emissions. Upon closer scrutiny, these defenses of ethanol also fall apart. A seminal study by Princeton University’s Tim Searchinger and several co-authors found that corn based ethanol nearly doubles greenhouse emissions over 30 years. While burning corn ethanol may produce fewer carbon emissions, growing, harvesting, and refining corn ethanol is a carbon intensive process. Supplementing the ethanol mandate is a tax credit and tariff on ethanol imports. Since the early 1980s, various tax credits have been available to ethanol refiners and import tariffs have been imposed on foreign ethanol (particularly Brazilian sugarcane). However, it was not until the RFS was enacted that ethanol became ubiquitous.
Instead of worrying about Iowa primary voters, policymakers need to look at the facts and see that Renewable Fuel Standard is a joke. Moreover, the law’s implications are more serious now than they have ever been. While there is legislation being proposed that repeals the RFS, more pressure is needed to let Congress know what a farce it really is. Americans shouldn’t have to worry about damage to their car engines from an expensive and inefficient energy source, especially one that is subsidized at their expense.