Pro-Con: Is it time to end the renewable fuel standard that requires ethanol in gasoline?

Yes: Gasoline — not corn alcohol — belongs in our fuel tanks

President Donald Trump frequently boasts of his success in rolling back costly and harmful regulations. Let’s hope that effort includes the renewable fuel standard (RFS).

The RFS is the latest phase in Congress’s decades-long support for the ethanol industry. The problem is that support has outlived its usefulness.

When U.S. crude oil production began to decline in the mid-1970s and Middle Eastern countries began restricting oil exports to punish the U.S. for its pro-Israel policies, Congress decided to act.

It began subsidizing ethanol, a mostly corn-based renewable fuel that is blended into gasoline. The goal was to reduce U.S. dependence on imported oil while creating a sustainable and more environmentally friendly alternative to gasoline.

But Congress took a different approach in 2005 when it passed the Energy Policy Act, which created the renewable fuel standard. The new law mandated that 4 billion gallons of ethanol be mixed into gasoline beginning in 2006.

Then Congress vastly expanded the mandate in 2007 when it passed the Energy Independence and Security Act, which required a minimum of 36 billion gallons of ethanol to be mixed into gasoline by 2022.

While that expansion may have seemed reasonable a decade ago, it no longer does.

The primary reason is that the RFS mandate was created just when the U.S. fracking boom was taking off.

Innovative drilling techniques have allowed the U.S. to become the world’s leading crude oil and natural gas producer. Oil production is high and prices are low.

By contrast, the ethanol mandate has pushed corn prices up by at least a third — and often much higher — since 2005.

The U.S. has become a net exporter of natural gas, and we could become a net crude oil exporter within five to 10 years.

Energy independence, which means energy security, is just around the corner. Thus the justification for mandating ethanol usage has largely vanished and may even be counterproductive.

Second, the environmental friendliness of ethanol is being reconsidered. Many environmental groups now realize that planting, growing and harvesting corn — about 40 percent of U.S. field corn becomes ethanol — takes large amounts of energy and water. And then the corn must be shipped to a processing plant and an oil refinery to mix in with the gasoline.

Another pressing problem is that more and more ethanol must be blended into gasoline every year. But gasoline usage has leveled off, which means that to meet the mandated ethanol goal the blend will have to rise from the current 10 percent to 15 percent or more.

But car manufacturers warn that increasing the “blend wall” higher than 10 percent could create serious engine problems, especially in many older cars.

And then there’s the refiners challenge. Philadelphia Energy Solutions, the largest refinery on the East Coast, recently filed for bankruptcy, blaming the RFS.

Refiners that don’t meet their goal of mixing ethanol have to buy a type of credit, known as RINs, which can be very costly.

The management consulting company McKinsey & Co. recently reported that the credits translated into an additional cost of up to $4 barrel. For example, Valero Energy has projected annual spending on RINs in 2016 could total $850 million. That ain’t chump change!

RINs represent government at its worst. They redistribute huge amounts of money without producing one drop of useable fuel.

Trump recently met with representatives from the ethanol industry, refiners and some senators to try and come up with a solution to the RFS problem.

Unfortunately, the ethanol industry wants to double down for even more. Bad idea.

The president has taken an important step in freeing up the oil and gas industry to meet our energy needs. Gasoline, not corn, belongs in our tanks.

No: Keep the renewable fuel standard but reboot it by using bio-masses instead of corn

The federal renewable fuel standard dates back 13 years and shows its age. It was created by the Energy Policy Act of 2005 and expanded by the Energy Independence and Security Act of 2007.

Both laws reflected concern during the Bush administration over U.S. dependence on imported oil and recognition that the nation should reduce greenhouse gas emissions linked to climate change.

The idea was simple enough. Using domestic renewable fuels is a plus for energy independence and reduces use of fossil fuels. It also helps farmers.

But times have changed. Dependence on imported oil peaked in 2005 at 60 percent, and it has been dropping ever since thanks to increased domestic production and improved vehicle fuel economy. It is now only 25 percent.

In addition, converting agricultural food crops to ethanol didn’t make as much sense as many thought it would.

True, it marginally reduced dependence on imported oil, but the conversion process was energy intensive and did little to reduce overall emission of greenhouse gases.

Unsurprisingly, numerous studies have faulted the mandate for its inefficiency and reliance on corn-based ethanol. The critiques have yet to push officials to make meaningful changes in the program.

Politicians in both parties continue to embrace the policy to show support for agricultural production.

As a result, the renewable fuel standard has morphed into what is now an annual federal mandate to grow corn for production of ethanol. Each year the EPA establishes a renewable fuel volume requirement for different forms of biofuels that are to be blended with gasoline and diesel fuel.

That decision is closely watched by the oil industry and farm groups, which intensely lobby both the White House and Congress in opposite directions on the mandate. The White House hosted several meetings with the groups in the past month to seek agreement.

In late 2017, the agency left the standard pretty much where it was to ensure “stability in the marketplace.” It is easy to see why. Some 40 percent of the domestic corn crop is now converted into fuel rather than being used for food.

This agricultural diversion can raise prices and worsen global food scarcity at a time of increasing world hunger. Yet farmers now depend on the program and understandably want to maintain it.

So, should we keep or even expand the fuel standard even though the U.S. is now far less reliant on imported oil? Should we end it because it doesn’t sufficiently reduce greenhouse gases?

Ideally, Congress would reboot the renewable fuel mandate in a new way for today’s economy, and design it as one component of a comprehensive response to climate change.

For starters, Congress could slowly transition from use of corn to make ethanol. Instead, it could encourage production of renewable fuels made from non-food sources. These could be cellulosic biomass such as agricultural residues and native prairie grasses.

There is a strong potential over time for such biofuel production if we get it right, and using such fuels could add jobs and improve the economy.

We also could invest more federal research dollars to find the most promising of such technologies. That in turn could motivate the private sector to make sensible economic choices.

There is some promise, for example, in what is called bioenergy with carbon capture and storage, or BECCS.

Trees and crops can naturally remove carbon dioxide from the atmosphere and we can store it geologically while also producing biofuels, electricity, and heat. Changes like this could aid farmers while encouraging the development of smarter, better technologies.

Given these alternatives, we should keep the federal ethanol requirement for its desirable goals of reducing reliance on imported oil and limiting greenhouse gas emissions. But we also should change the rules to diversify the crops that are used.

This story was originally published March 15, 2018 at 3:32 PM with the headline "Pro-Con: Is it time to end the renewable fuel standard that requires ethanol in gasoline?."