Should the U.S. End the Ethanol Mandate?

Source: By The Wall Street Journal, Margo Oge & Robert Bryce • Posted: Monday, November 16, 2015

The Renewable Fuel Standard, otherwise known as the ethanol mandate, requires refiners to blend an increasing amount of biofuels into the U.S. gasoline supply each year.

Created in 2005, the standard was meant to help reduce carbon emissions as well as U.S. dependence on foreign oil. But critics question how much it has helped on either score. Some say corn ethanol, the fuel most commonly blended with gasoline under the standard, actually worsens pollution. Others say the domestic oil boom has done far more to wean the nation off foreign oil.

In May, the Environmental Protection Agency proposed scaling back the volume targets for renewable fuels under the mandate, in part because advances in fuel efficiency mean drivers are using less gas than the law envisioned. The agency also cited limited availability of renewable fuels made from products other than corn.

The proposal drew criticism from environmentalists, as well as the ethanol and corn industries, who argued it was a step back from the law’s purpose. But some refiners said it wasn’t scaled back enough. The new targets are set to be finalized later this month. Meanwhile, the debate over the standard continues.

Robert Bryce, a senior fellow at the Manhattan Institute for Policy Research, says the ethanol mandate is bad for consumers and the environment. Margo T. Oge, a former director of the Office of Transportation and Air Quality at the Environmental Protection Agency, says the Renewable Fuel Standard is crucial to the development of a range of alternative fuels.

YES: It Hurts Consumers, Adds to Pollution And Hasn’t Cut Oil Imports

By Robert Bryce

Congress approved a 40-cent-per-gallon subsidy for corn ethanol way back in 1978, the same year the Bee Gees were topping the pop charts with their disco hit “Stayin’ Alive.” Paying to support corn ethanol was a bad deal then. It’s an even worse deal now.

Taxpayers are no longer directly subsidizing ethanol producers, but the Renewable Fuel Standard requires retailers to blend about 13 billion gallons of corn ethanol a year into the gasoline they sell to the public. That mandate hurts consumers, is bad for the environment and does effectively nothing to reduce America’s need for foreign oil.

Paying at the pump

Ethanol costs motorists at the pump. The ethanol claque frequently claims its fuel is cheaper than gasoline. While that may be true by volume, the posted price doesn’t reflect ethanol’s lower energy density. It takes about 1.5 gallons of ethanol to produce the energy contained in a gallon of gasoline. Data collected by the state of Nebraska (the country’s second-largest ethanol producer, behind Iowa) since 1982 shows that when measured on an energy-equivalent basis, ethanol has always been more expensive than gasoline.


As I showed earlier this year in a report for the Manhattan Institute, the ethanol mandate is now imposing $10 billion a year in additional fuel costs on motorists, compared with what they would have paid for gasoline alone—about $47 a year for the average driver.

The ethanol mandate also results in more greenhouse gases. In May, Emily Cassidy, a research analyst at the Environmental Working Group, issued a reportthat found that corn ethanol emits 20% more carbon dioxide per unit of energy produced than standard gasoline. In 2014, domestic corn ethanol consumption “resulted in 27 million tons more carbon emissions than if Americans had used straight gasoline in their vehicles,” the report said. In August, John DeCicco, a research professor at the University of Michigan’s Energy Institute, found that greenhouse-gas emissions from corn ethanol are as much as 70% higher than those from standard gasoline.

The imports story

Now, let’s look at oil imports. Since the 1970s, ethanol boosters have been using the boogeyman of foreign oil to justify subsidies and mandates for their fuel. The result: Ethanol distilleries are now consuming nearly 40% of all domestic corn output to produce fuel equivalent to about 600,000 barrels of oil a day. And it took nearly four decades of federal subsidies and mandates to get the ethanol sector to that size.

Meanwhile, domestic oil production has increased by more than 3.6 million barrels a day since 2006. Thus, in less than a decade, the oil sector has increased production by six times the total output of every ethanol distillery in America. That’s why we’re importing less foreign crude.

The always-distant dawn of “advanced” biofuels is no reason to keep the Renewable Fuel Standard alive. We’ve been enduring the hype about them since the days of Donna Summer, Studio 54 and “Saturday Night Fever.” Yet, despite lavish federal subsidies and mandates, those next-generation biofuels have yet to be produced in significant quantities at competitive prices.

If gasoline retailers want to add ethanol to their fuel, it should be their prerogative, not a federal mandate. It’s time for Congress to pull the plug on this disco-era energy policy.

Mr. Bryce is a senior fellow at the Manhattan Institute for Policy Research. His latest book is “Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong.” He can be reached at

NO: It’s Needed to Develop The Next Generation Of Alternative Fuels

By Margo T. Oge

The debate over the Renewable Fuel Standard often falls into a predictable—and misleading—rut: corn ethanol versus petroleum. This discussion is a distraction from the bigger issue: how to develop and scale up the next generation of biofuels, like cellulosics.

So let’s get two things out of the way.

First: The RFS is not just an ethanol mandate. It also encourages the development of advanced biofuels made from cellulosic feedstock like wood chips, grasses, corn stover (the leaves and stalks left behind after harvesting) and other nonedible plants.

Yes, currently corn ethanol is by far the biofuel most commonly blended with gasoline under the RFS. But that isn’t the disaster corn ethanol’s critics make it out to be.

There are many studies on the environmental impact of corn ethanol. While some are more pessimistic, many agree with the Environmental Protection Agency’s 2010 analysis showing that corn ethanol is cleaner than gasoline.

This year, for instance, the California Air Resources Board concluded, after five years of expert reviews and public engagement, that corn ethanol from a typical Midwestern facility is 20% cleaner than gasoline, similar to the EPA results.

So, the status quo is not harming the environment, it’s helping.

But it’s the future we should be focusing on. Advanced biofuels from cellulosic feedstock provide an 80% reduction in carbon pollution compared with gasoline. The RFS is driving development of these advanced biofuels.

Unintended consequences

Second: Getting rid of the RFS isn’t going to get rid of corn ethanol, nor will it significantly affect the price of gasoline.

The RFS has gotten the proportion of ethanol in gasoline up to about 10%. Today, that is a way of life for gasoline producers—ethanol is a cost-effective way for them to increase octane levels and reduce emissions.

Now that it is an established gasoline additive, gasoline producers will continue to blend ethanol at similar levels with or without the RFS.

If repealing the RFS wouldn’t get rid of corn ethanol, what would it do? It would end investment in the next generation of fuels.

Stability is crucial

Companies are investing money, technology and brainpower into facilities that will produce cellulosic ethanol from corn stalks. Production of biodiesel, renewable natural gas from wastes and other advanced fuels is also surging. There’s an emerging market, and jobs being created, in advanced fuels. These are the fuels that ultimately will reduce our dependence not only on foreign oil but on any oil.

But, as with other emerging technologies, companies need to see long-term policy stability to continue expanding investment. This is exactly what the Renewable Fuel Standard offers. Eliminating the standard because of its corn ethanol mandate would undermine much of this important progress.

The Renewable Fuel Standard isn’t a perfect policy, but it’s a critical piece of a lower-carbon future. With the continuing development of a range of alternative fuels, we are on a path to a more diverse, more climate-friendly fuel mix.

Without the RFS, that wouldn’t have happened. Abandoning that progress now just doesn’t make sense.

Ms. Oge is a former director of the Office of Transportation and Air Quality at the Environmental Protection Agency. She is the author of the book “Driving the Future: Combating Climate Change With Cleaner, Smarter Cars.” She can be reached at