Study questions RFS’s environmental and economic benefits

Source: Amanda Reilly, E&E reporter • Posted: Thursday, October 15, 2015

University of Tennessee researchers cast doubt today on the environmental and economic track record of the renewable fuel standard, the federal policy that requires refiners to use increasing amounts of ethanol and advanced biofuels.

The RFS, they argue, failed to achieve its goal of spurring advanced biofuel production while helping boost the corn ethanol industry. They question ethanol’s benefits in reducing greenhouse gas emissions, air pollution, water contamination and soil erosion.

And they say the ethanol industry has hidden costs in environmental damage and couldn’t survive without government assistance.

“It is time to re-think the design, structure and practical implementation of the RFS,” their study concludes, “and examine whether other policy designs may be more appropriate for promoting the production and consumption of advanced biofuels.”

Research professor Daniel De La Torre Ugarte and professor Burton English wrote the report, which was commissioned by the American Council for Capital Formation, a member of a coalition opposed to the RFS.

Biofuel producers criticized both the study’s aims and findings.

“Clearly, this study was published with an agenda and without regard to the facts,” said Tom Buis, co-chairman of ethanol trade group Growth Energy. “It is misleading, inaccurate and runs counter to a large body of expert research.”

A pro-RFS group recently formed by former Sen. Jim Talent (R-Mo.) today launched an online ad to promote the program that it calls “American’s most successful energy policy.”

Congress created the RFS in 2005 and significantly expanded it in 2007. Largely driven by the RFS, corn ethanol production increased 267 percent, from 3.9 billion gallons in 2005 to 14.3 billion gallons in 2014. Backers say that the RFS has increased energy independence, boosted rural economies and reduced the transportation fuel sector’s environmental footprint.

The UT authors said they used economic analysis, agricultural modeling and a literature review to study the program’s track record over the past decade.

When land-use change is not taken into account, they found, corn ethanol production brought on by the RFS could be found to decrease greenhouse gas emissions. But when land use is accounted for, the climate change benefits of corn ethanol become a lot less certain. Some studies have blamed ethanol for up to a 93 percent increase in emissions compared with gasoline.

They concluded that current ethanol generation technology generally has life-cycle greenhouse gas emissions that exceed those of gasoline.

The authors also found that, while ethanol reduces carbon monoxide emissions from automobiles, the corn-based fuel generally increases emissions of other major pollutants during the full life cycle of production.

Growth Energy’s Buis pushed back on the findings, pointing to research by Argonne National Laboratory that found ethanol reduced greenhouse gas emissions by 34 percent, even when indirect land-use changes were taken into account, compared with gasoline.

“Side by side, ethanol wins every time when it comes to the environment,” Buis said. “How are the ecologically devastating spills like Deepwater Horizon, which dumped more than 200 million gallons of oil and polluted an area in the Gulf of Mexico the size of Oklahoma, so easily forgotten?”

Does RFS hurt cellulosic ethanol?

While ethanol producers had their most profitable year ever last year, the UT study also contends that the success was because the government propped up the industry. Without the RFS or other assistance over the past decade, the study argues that the industry would not be able to turn a profit.

“Our analysis shows that the corn ethanol industry, even with its tremendous growth over the past decade and technology maturity, cannot survive in any real commercial sense without mandated fuel volume requirements,” the study says.

If there were no RFS or tax credits for corn ethanol over the past decade, the study says, ethanol demand would be only about 4.34 billion gallons in 2014, or 30 percent of where it is now. That scenario would have resulted in lower incomes for farmers, but the study concludes that the overall net economic benefit would have been $28.4 billion.

If corn ethanol could have been replaced with cellulosic ethanol — a type of ethanol made from other plant materials — the benefits would have been even greater, the authors said. The net economic benefit would have been $42.1 billion in 2014.

Both scenarios would have resulted in substantially less U.S. land being used for corn production, the study found. Both also resulted in less soil erosion and lower greenhouse gas emissions, but increasing cellulosic ethanol production would have resulted in greater fertilizer consumption, according to the authors’ modeling.

Until now, the study says, the RFS has succeeded in focusing attention on corn ethanol to the detriment of advanced biofuels.

Congress placed a cap on corn ethanol under the program at 15 billion gallons with the intent of spurring advanced biofuel production. But in 2014, ethanol accounted for 87 percent of the nation’s total biofuel production. Cellulosic biofuel has fallen far short of the levels that Congress wrote into the 2007 statute.

A better policy, UT researcher say, would have been an investment-based mechanism designed to support projects that use cellulosic materials such as crop residue to produce biofuels.

“The subsidies and mandates for corn ethanol would have been better and more effectively used,” they say, “had they been directed toward advanced biofuels.”

On the other hand, the Americans for Energy Security and Innovation ad calls for more robust annual renewable fuel targets. It hits the Obama administration for a proposal earlier this year to roll back the annual mandates compared with the congressional levels.

“It’s no time to surrender America’s leadership on renewable fuels,” it says.