Congress should not oppose biofuels. They create jobs and help the environment.
No fuel at scale today comes close to equaling ethanol’s ability to prevent American cars and trucks from spewing pollutants from their tailpipes. Unfortunately, one of the most important incentives for the growth of biofuels is now under attack by misguided lawmakers and Big Oil.
If Americans are serious about curbing climate change, they need to use less gasoline and more clean-burning biofuels, such as ethanol. That’s because the combustion of petroleum-based fuels is one of the largest sources of greenhouse gas emissions, which trap heat in the atmosphere and contribute to climate change.Skip to next paragraph
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No fuel at scale today comes close to equaling ethanol’s ability to prevent American cars and trucks from spewing pollutants from their tailpipes. Unfortunately, one of the most important incentives for the growth of biofuels – the federal Renewable Fuel Standard – is now under attack by misguided lawmakers and Big Oil lobbyists.
While subsidies for oil and gas average $4.86 billion per year, the ethanol industry receives no tax subsidies and renewal fuel standard doesn’t cost taxpayers a dime. It is simply a guideline (a 2005 energy law provision) requiring gasoline blenders to use increasing amounts of renewable fuels.
In hearings last week, the House Energy and Commerce Committee heard a range of views on the the fuel standards and the production of biofuels. Several lawmakers concerned about the rising costs of corn – the source of ethanol – have argued for repealing the fuel mandate. They argue that eliminating the mandate to produce ethanol will relieve some of the upward pressure on corn prices, after a drought diminished the crop.
Committee members may draft legislation in the coming months aimed at reforming the renewable fuel mandate as opposed to repealing it. They’re right not to repeal the standard. But even tinkering with it would create uncertainty that would discourage growing investments in new environmentally friendly, job-creating biofuel technologies. Now that investors are putting their money into promising projects and gasoline blenders are using more renewable fuels, why change the rules in the middle of the game?
Does the demand for corn for ethanol production drive food prices up? Nowhere near as much as the alarmists claim. And much less than other factors. For the average US household, 86 percent of food spending covers the costs of food production – not the raw product. The cost of food includes energy, transportation, processing, packaging, marketing, and other supply-chain costs. Only 14 percent pays for raw agricultural ingredients, such as corn.
And in the global food-supply chain, US ethanol production uses less than 3 percent of the world’s grain supply on a net basis. With long-term productivity gains, American farmers can continue to feed and fuel the world.
But the renewable fuel standard – and ethanol – also face opposition from Big Oil and its allies, who don't want lower-priced, less-polluting competition. Yet the efficacy of ethanol speaks for itself.
Contrary to attacks by the oil industry and its friends, ethanol does not increase gasoline prices at the pump. Ethanol now costs 60-70 cents a gallon less than gasoline. This cost savings is in keeping with the conclusions of a study by economists at the University of Wisconsin and Iowa State University, which found that, in 2011, ethanol reduced wholesale gasoline prices by $1.09 per gallon nationally. In fact, ethanol reduced the average American household’s spending on gasoline by more than $1,200 in 2011.