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.
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.
The Obama administration rightly supports the renewable fuel standard as well as research and investment to develop the next generation of biofuels. Announced in the midst of one of the hottest summers in recorded history, President Obama's Climate Action Plan also calls for “reducing greenhouse gas emissions from the transportation sector.”
Study after study has shown that using ethanol in place of gasoline helps to reduce emissions of the major greenhouse gas, carbon dioxide, by up to 30 to 50 percent, given today's technology. A recent peer-reviewed study published by Yale University's Journal of Industrial Ecology concluded that grain ethanol cuts greenhouse gas emissions by 48 to 59 percent when directly compared to gasoline. Even when factoring in the unproven theory that ethanol production changes land-use patterns, ethanol still reduces greenhouse gas emissions by 34 percent. The charge has been made that greater ethanol use leads to the cutting down of the rain forest. Yet, while ethanol use has increased, rain forest destruction has declined.
Similarly, using the GREET (Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation) model developed by the Department of Energy, the 13.3 billion gallons of ethanol produced in the United States in 2012 reduced greenhouse gas emissions by 33.4 million tons. That's the same as removing 5.2 million cars – as many as all the cars on the road in the entire state of Michigan – from America's roads.
And because ethanol is made from renewable, plant-based feedstocks, the carbon dioxide released from cars burning the biofuel is “recycled” by corn, sugarcane, trees, and other ethanol plant crops, which use carbon dioxide in their grow process.
Since the renewable fuel standard was enacted, with the support of then-President Bush and then-Sen. Obama, US ethanol production has increased from 6.48 billion gallons in 2007 to 13.3 billion gallons last year. Delivering demonstrable environmental benefits for the atmosphere and fuel choice for motorists, the industry supports almost 400,000 American jobs, reviving rural communities.
Meanwhile, by requiring greater use of non-grain (cellulosic) ethanol, the fuel standard is stimulating investments and innovations in the next generation of biofuels that promise even greater environmental benefits.
Already, the cellulosic biofuels industry has facilities and projects under development in more than 20 states, with billions of dollars in private investment. By 2030, the US could produce 75 billion gallons of cellulosic biofuels annually. Look for biofuels being made from environmentally favorable feedstocks ranging from corn stalks to wood chips and municipal garbage.
In his speech announcing his Climate Action Plan, President Obama declared: "A low-carbon, clean-energy economy can be an engine of growth for decades to come. And I want America to build that engine."
Clean-burning, American-made biofuels should – and can – power that engine. And American lawmakers should support – not stymie – the renewable fuel standard that helps keeps that engine running clean.
Bob Dinneen is the president and CEO of the Renewable Fuels Association, the trade association of the American ethanol industry.