Editor’s Note: There are a range of objections the fossil fuel side can have to the RFS. Some of those are outlined below, and ethanol producers certainly have counter arguments. However, the weakest objection to my estimation is the “food-to-fuel” debate. Food commodity prices have seen some significant increases in recent years, as well as some significant and even more recent declines. While crop choice for biofuel production certainly can, and likely does (in some cases) impact food production, the commodity price increases also hit regions and crops not likely to be directly or indirectly impacted by corn ethanol.
My take has been that these increases, like at least some portion of the price increases in oil running up to 2008, were due to commodity speculation and non-traditional/non-commercial players after President Clinton repealed the Glass-Steagall Act and signed the Commodity Futures Modernization Act. Dood-Frank, while in my opinion bloated legislation that ultimately may do more harm than good, did have some significant commodity reforms thanks largely to NEFI, PMAA and a handful of sharp heating fuels folk like Sean Cota. While these reforms have been watered down during the rule-making process, you no longer have major banks also being “major oil companies.” This article in a 2012 issue of Time Magazine provides some background on that position. — Keith Reid
API, EWG, ActionAid Call for Repeal of Corn Ethanol Mandates
API, the Environmental Working Group, and anti-hunger group ActionAid USA called for repeal of corn ethanol mandates under the Renewable Fuel Standard during a joint press event Wednesday.
“A chorus of concerned groups—from consumer groups to environmental groups to anti-hunger groups and industry groups—are calling for repeal or reform of the nation’s ethanol mandates under the Renewable Fuel Standard,” said Bob Greco, API downstream group director. “API remains seriously concerned that increasing ethanol mandates under the RFS stands to harm consumers and our economy.”
“The Renewable Fuel Standard has not only failed consumers and the environment, it has also failed the advanced biofuel industry it was supposed to help,” said Scott Faber, vice president of government affairs at EWG.
“Over the next decade, [biofuel] mandates will drive a 43 percent increase in global biofuel demand,” said Kelly Stone, biofuels analyst at ActionAid USA. “The United States and the Renewable Fuel Standard will be responsible for half of that demand growth. This level of growth will have serious implications for hunger and land rights around the world, compounding the problems we are already seeing from biofuel production.
High ethanol fuel blends could significantly damage millions of cars on the road, according to testing by the oil and auto industries (here and here), and automakers have said they will not honor warranties when consumers use these higher blends. The Congressional Budget Office determined that current ethanol mandates could raise the cost of fuel for consumers and damage our economy.
“The law started off with the best of intentions, but the program is now unworkable,” Greco said. “This year we could hit what is called the ethanol blend wall, where the RFS would force more than 10 percent ethanol into each gallon of gas. This is concerning because most cars on the road today cannot tolerate these higher ethanol blends.”
API is the only national trade association representing all facets of the oil and natural gas industry.
