Year-Round E15 Is a Good First Step, But More Is Needed to Confront the New Energy Crisis

Source: By C. Boyden Gray, RealClear Energy • Posted: Sunday, May 8, 2022

President Biden recently announced that his administration would temporarily suspend EPA’s summertime ban on selling gasoline made with 15% ethanol, or E15, as it’s commonly known. As the President explained, this will reduce soaring gasoline prices and will promote American energy independence.

It’s also one of the most cost-effective green energy solutions available. This is because ethanol is the world’s cheapest and cleanest source of octane. High octane fuels made with ethanol are not only cheaper than unblended gasoline, but they also enable engine designers to simultaneously increase fuel efficiency and performance, all while using a renewable fuel much less carbon intensive and polluting than unblended gasoline.

The President’s temporary waiver for year-round E15 is a good first step, but moving towards a comprehensive, sound, and sustainable energy policy will require some course correction. The administration’s current approach reflects a tug-of-war between what might be called “climate idealism” and “climate realism.” Climate idealists in the administration are committed to the idea that the only way to confront “the climate crisis” is to bury the internal combustion engine and natural gas and to replace them with electric cars and windmills.

On the other hand, the realists—including those like Agriculture Secretary Tom Vilsack, who pushed for the President to approve this E15 waiver—know that the costs of moving towards an all-electric fleet are enormous and probably politically unachievable. Electric cars are not a cost-effective means of reducing greenhouse gas emissions, and that the raw materials simply aren’t available at scale. This is a reality that Elon Musk has admitted means that electric cars will be a niche product for a long time. Even the Postal Service recently reached the conclusion that, despite the EPA’s urging, it had no feasible choice but to replace worn-out delivery vehicles almost exclusively with new, gasoline-powered trucks.

The current confusion has resulted in incoherent and conflicting policies. Generally, the climate idealists get to write the talking points and set long-term goals and policies, while the climate realists can get special dispensations in the short term based on political necessity, such as the E15 waiver, President Biden’s decision last month to release a million barrels of oil per day from our strategic reserves, and the mini-reversal on drilling leases.

As our many failed COVID relief strategies have shown, however, piling one “temporary” program on top of another for years on end is no way to run a country. The weakness of much climate idealism is the notion that we are in a “climate emergency,” and that the only way forward is to simply quit fossil fuels cold turkey.

The prevalence of this ethos is why the administration has largely ignored or been hostile to many proposals that would curb greenhouse gas emissions—like increased use and export of natural gas, building new nuclear power plants, or moving towards a high-octane, low-carbon fuel standard to enable the development of more efficient and lower emitting internal combustion engines. No one seriously disputes the environmental benefits of these approaches, but, for the climate idealists, if it’s not wind or solar, it’s only a halfway solution that won’t fix the “underlying problem.” This is both wrong on the merits and deeply unpopular.

With this issue as with so many others, the problem comes down to poor leadership. Whether it’s the botched withdrawal from Afghanistan, COVID policy, or incoherent climate change regulation, the pattern is the same. Instead of carefully charting a clear course based on realistic goals, senior administration officials get way ahead of themselves, making unforced errors that force the President into a reactive posture.

It is time for the President to tighten the reins and take a proactive position. With energy policy, this means abandoning the misguided climate idealism favored by some of his advisors for what Senator Manchin has aptly described as an all-of-the-above strategy that focuses on market-based solutions to reaching our greenhouse-gas emissions goals. The advantages of this approach are enormous. Increased use of natural gas could reduce national greenhouse gas emissions from electricity generation by up to a third within just a few years, while reducing consumer costs and improving reliability. Nuclear power will take longer to expand, but its long-term benefits are even better, as it is the safest, cheapest, and lowest-polluting form of energy generation available.

For automobile transportation, the U.S. should adopt a high-octane, low-carbon fuel standard like the one proposed in the bi-partisan Next Generation Fuels Act pending in Congress. The bill sets minimum octane standards for gasoline, requires that fuels meet strict life-cycle limits on carbon-dioxide emissions, and authorizes the use of higher blends of ethanol to accomplish these goals. Higher octane translates into greater fuel efficiency, better performance, and lower fine particle pollution. Adoption of a minimum octane standard would improve efficiency in existing cars by up to 5%. In new cars, the benefits can be twice that. This approach is also a way to reduce the price at the gas pump, as ethanol is typically much cheaper than unblended gasoline.

The list of achievable and cost-effective green energy proposals could go on and on and with the right structure would include many innovations not yet developed. The only way to integrate what we know already and what we don’t know yet is to establish a marketable permit system under an overall percentage reduction goal for pollution, and let the competitors fight it out for the cheapest solutions. Successful examples are available—the Acid Rain program from the 1990s, the EU’s ETS, RGGI in New England, and the California cap-and-trade program. A s for cars, automakers are already under an existing market incentive structure, but it is one that would be vastly improved by removing the artificial constraints stopping them for employing the best and most cost-effective options available.

American voters care deeply about the environment, but they are also rightly skeptical of elites bearing utopian fantasies. Market-based, technology-neutral solutions are available right now. President Biden has a clear choice: he can either embrace these solutions and follow through on his promise to govern as a pragmatic centrist, or he can continue to let unpopular and unachievable progressive dogmas dominate his administration’s agenda. The success of his presidency depends in no small part on the decision he makes next.

C. Boyden Gray served as White House counsel to President George H.W. Bush and as Ambassador to the European Union and Special Envoy for Eurasian Energy under President George W. Bush. Mr. Gray’s law and strategy firm, Boyden Gray & Associates, represents multiple corn growers associations and other clients interested in fuels policy.