The Environmental Protection Agency recently issued new rules dictating that 18 billion gallons of biofuels must be blended into America’s 2016 transportation fuel supply. This mandate, known as the Renewable Fuel Standard, has been a disaster for the country. The only sensible minimum renewable fuel mandate is zero.
The RFS was created in 2005 to curtail greenhouse gas emissions by reducing the use of fossil fuels. However, the RFS is not defensible based on its impact on greenhouse gas emissions.
Once the life cycle of ethanol is considered (ethanol is the prominent biofuel used to meet the RFS), ethanol does not reduce greenhouse gas emissions. Producing this corn-based biofuel actually creates more greenhouse gas emissions than fossil fuels.
How much more? An analysis by the Clean Air Task Force found that “corn ethanol’s net emissions over 30 years are approximately 28% higher than the emissions that would result from the use of gasoline over that same period.”
That’s because ethanol production requires forests, wetlands, and grasslands to be converted to new cropland. In fact, 8 million acres of wetland and grassland were converted to grow corn between 2008 and 2011.
These forests, wetlands and grasslands are important carbon sinks that naturally remove greenhouse gasses from the atmosphere. Destroying these lands to supply the RFS has released up to 236 million metric tons of carbon dioxide into the atmosphere.
Ethanol’s drawbacks do not end with more greenhouse gas emissions. There are also unintended consequences that impose economic hardships on families, particularly lower income families.
The RFS creates an artificial demand for biofuels that diverts land, water, and food resources. Although the value of these resources is ensuring food is plentiful and low-priced, the RFS diktats are arbitrarily diverting these resources toward transportation uses.
As every student in an introductory economics course is taught, when growth in the demand for a good exceed the growth in its supply, its price will rise. Such has been the case for food due to the RFS. For instance, 37 percent of the U.S. corn harvest and 13 percent of the total global corn harvest was diverted away from the food supply toward ethanol production in 2014. This, in turn, raised food prices on the least well-off globally.
Indeed, bolstered U.S. ethanol production raised corn prices by $11.6 billion for importing nations between 2006 and 2011. Of that additional cost, $6.6 billion was shouldered by the developing world.
As ActionAid policy analyst Kelly Stone put it, “No-one should go hungry to fill our gas tanks.”
Rising corn prices don’t just make it harder for low-income people to feed themselves. Such market distortions also create even greater incentives for farmers to plow up previously uncultivated land, worsening the life cycle greenhouse gas emissions problem.
By any measure, the RFS has failed to achieve its objectives. Worse, by creating an artificial market for ethanol, the EPA’s policy is doing imposing economic harm without creating any good for the planet.
More importantly, market evolutions and innovations are creating a revolution in the natural gas market. Natural gas generates far less greenhouse gas emissions than other fossil fuels, including ethanol. America’s increased use of natural gas is a chief reason why U.S. energy-related greenhouse gas emissions hit a 20-year low in 2012.
The only reasonable reform to the RFS is a full repeal that wipes the policy off the books. The continuation of biofuel mandates, at any level, will harm consumers, the environment, and the world’s least well-off.
Wayne Winegarden is a senior fellow at the Pacific Research Institute.