Does The Ethanol Mandate Increase Food Prices?

Is Ethanol Harmful To Your Vehicle?

Is Renewable Fuel Better Or Worse For The Environment?

Does The Renewable Fuel Industry Receive Disproportionate Amounts Of Subsidies?

EPA Delays Decision On Renewable Fuel Standard 

In 2013, EPA Said It Might Roll Back RFS Levels. At the end of 2013, the EPA announced that it was considering lowering the targets for the RFS. Greenwire reported that the RFS initially required “36 billion gallons of biofuel a year to be blended into motor fuel by 2022,” and that if the targets were lowered, it would be the first time the agency had done so. [Greenwire, 10/9/13]

EPA Announced It Will Delay Decision On 2014 RFS Levels Until Next Year. On November 21, the EPA announced that it would not finalize the 2014 levels for the RFS before the end of the year. As Vox.com reported, some members of the biofuel industry praised the decision for allowing the agency to “reconsider” the roll back:

The EPA was supposed to finalize its biofuels targets in 2014, but has now decided to delay any decision altogether.

Instead, the agency said it would finish up the 2014 biofuels targets next year and try to get back on schedule in proposing the 2015 and 2016 blending volumes.

The biofuels industry seemed happy with the delay -- in part because there's still time to convince the EPA not to cut its biofuels targets. Here's Brian Jennings, executive vice president for the American Coalition for Ethanol: “Thanks to thousands of comments from ACE members and other biofuel supporters, EPA wisely chose to reconsider their ill-advised proposal which would have legitimized the so-called 'blend wall'.” [Vox.com, 11/21/14]

MYTH: Renewable Fuel Standards Raise Food Prices

• On the October 30 edition of Fox Business' Opening Bell with Maria Bartiromo, CKE Restaurants' Andy Puzder blamed the Renewable Fuel Standard for increasing food prices, stating, “I think the Renewable Fuel Standard is having a real impact on commodity prices across the board.” [Fox Business, Opening Bell With Maria Bartiromo, 10/30/14]
• A CNN.com op-ed headlined “Paying more for food? Blame the ethanol mandate” advocated for “scrap[ping] the national ethanol mandate altogether” in order to reduce food prices. [CNN.com, 8/20/12]
• A USA Today article headlined “Ethanol pumping up food prices” claimed that a “longer-term cause” for increased global food prices is that “24% of the U.S. corn crop is now mandated to go to ethanol.” [USA Today, 2/14/11]
• The Washington Post published an op-ed claiming that biofuels are “contribut[ing] to the food crisis” because “for every additional ton of grain needed to feed a growing world population, rising government requirements for ethanol from grain have demanded a matching ton.” The op-ed concluded by arguing that we should “limit biofuel growth.” [The Washington Post, 2/11/11]

FACT: Ethanol Production Does Not Divert Food Or Raise Prices 

CBO Report: RFS Will Not Significantly Alter Food Prices. The Congressional Budget Office (CBO) analyzed how the RFS will impact the economy beyond 2014 and determined that it will have no significant impact on food prices. The CBO also stated that if the standards were increased to meet the initially proposed requirements by 2017, it would result in increased spending on food by just one-quarter of 1 percent:

Food Prices Would Be Similar Whether the RFS Was Continued or Repealed

Roughly 40 percent of the U.S. corn supply is used to make ethanol. To the extent that the Renewable Fuel Standard increases the demand for corn ethanol, it will raise corn prices and put upward pressure on the prices of foods that are made with corn -- ranging from corn-syrup sweeteners to meat, poultry, and dairy products. CBO expects that roughly the same amount of corn ethanol would be used in 2017 if fuel suppliers had to meet requirements equal to EPA's proposed 2014 volumes or if lawmakers repealed the RFS, because suppliers would probably find it cost-effective to use a roughly 10 percent blend of corn ethanol in gasoline in 2017 even in the absence of the RFS. Therefore, food prices would also be about the same under the 2014 volumes scenario and the repeal scenario.

By contrast, corn ethanol use in 2017 would be about 15 percent (or 2 billion gallons) higher under the EISA volumes scenario. CBO estimates that the resulting increase in the demand for corn would raise the average price of corn by about 6 percent. However, because corn and food made with corn account for only a small fraction of total U.S. spending on food, that total spending would increase by about one-quarter of one percent. [Congressional Budget Office, 6/26/14]

Only One Percent Of Corn Grown In U.S. Eaten By Humans. Wired published a post by an Argonne National Laboratory researcher that pointed out that the type of corn grown for ethanol is inedible to humans -- instead, it is primarily used for animal feed. The post also stated that some types of biofuels can be grown on marginal lands that wouldn't support other commodities, concluding that it is possible to “produce food and fuels”:

Only 1 percent of all corn grown in this country is eaten by humans. The rest is No. 2 yellow field corn, which is indigestible to humans and used in animal feed, food supplements and ethanol.

Specifically, a bushel of corn used for ethanol produces 1.5 pounds of corn oil, 17.5 pounds of high-protein feed called DDGS, 2.6 pounds of corn meal and 31.5 pounds of starch. The starch can be converted to sweeteners or used to produce 2.8 gallons of ethanol. DDGS displaces whole corn and some soybeans traditionally used in animal feed. The United States is a large exporter of DDGS to China and other countries.

[...]

Taken together, the increase in crop yield and the use of marginal lands can enable us to produce food and fuels. [Wired, 6/23/11]

World Bank: Crude Oil Prices Are The Primary Driver Of Food Prices. The World Bank released a paper in 2013 finding that crude oil prices have the greatest long-term effect on food prices, with biofuel production responsible for only secondary effects:

This paper examines the relative contribution of various sector and macroeconomic drivers to price changes of five food commodities (maize, wheat, rice, soybeans, and palm oil) by applying a reduced-form econometric model on 1960-2012 annual data.

[...]

It concludes that most of the price increases are accounted for by crude oil prices (more than 50 percent), followed by stock-to-use ratios and exchange rate movements, which are estimated at about 15 percent each. Crude oil prices mattered most during the recent boom period because they experienced the largest increase. [World Bank, 5/13]

MYTH: Ethanol Will Harm Your Vehicle

• A post on the industry news website Breaking Energy argued that E15, a gasoline blend that contains 15 percent ethanol rather than the standard 10 percent, “could risk damage to engines and fuel systems in vehicles that weren't designed to use it.” [Breaking Energy, 10/21/14]

• Forbes.com contributor William Pentland cited a claim from the conservative blog Hot Air that “the extra ethanol [of an E15 blend] could corrode plastic, rubber and metal parts in cars not built to handle it.” [Forbes.com, 2/1/14]

• The Hill reported that a study sponsored by the American Petroleum Institute (API) and carried out by the Coordinating Research Council (CRC) found that E15 “could cause millions of car engines to stop working.” [The Hill, 1/29/13]

• The Detroit Free Press' auto critic disputed the EPA's statement that E15 is safe for car models from 2001 and later with automakers' claim that it is only safe for models dating 2012 and later. [Detroit Free Press, 5/29/13]

FACT: Rigorous Studies Show That Ethanol Does Not Harm Engines

DOE: Industry-Funded Study Claiming Ethanol Hurts Engines Is “Significantly Flawed.” Patrick B. Davis, the manager of the Department of Energy's Vehicle Technologies Program, published an article critiquing the CRC study that found E15 and E20 (a gasoline blend with 20 percent ethanol) hurt auto engines. The DOE concluded that the study was “significantly flawed” because it did not establish a proper control group and that it cherry-picked vehicles “already known to have durability issues” (emphasis original):

The CRC failed to establish a proper control group, a standard component of scientific, data-driven testing and a necessity to determine statistical significance for any results.

• Instead, only three out of the eight engines were tested with straight gasoline containing no ethanol (E0), and one of those three failed the CRC's test.

• No engines were tested with E10 fuel, the de facto standard gasoline for all grades, which represents more than 90 percent of gasoline available in the U.S. market. Even though E10 fuel has been in the market for over 30 years and is used in all current conventional gasoline vehicles and small non-road engines, it was not part of the CRC test program.

          [...]

• Perhaps most surprisingly, the CRC decided to select several engines already known to have durability issues, including one that was subject to a recall involving valve problems when running on E0 gasoline and E10. It is no surprise that an engine having problems with traditional fuels might also “fail” with E15 or E20 ethanol-blended fuels -- especially using a failure criterion chosen to demonstrate sensitivity to ethanol and operated on a cycle designed to stress the valves. [Energy.gov, 5/16/12]

DOE's More Rigorous Study Found No “Unusual Wear” From E15 On Current Systems. The DOE studied 86 vehicles -- compared to the CRC's analysis of eight engines -- and “did not uncover unusual wear that would be expected to impact performance.” From Davis' article:

Prior to the CRC's findings, the Energy Department conducted its own rigorous, thorough and peer-reviewed study of the impact of E15 fuel on current, conventional vehicle catalyst systems. The Energy Department study included an inspection of critical engine components, such as valves, and did not uncover unusual wear that would be expected to impact performance. Rather than using an aggressive test cycle intended to severely-stress valves, the Energy Department program was run using a cycle more closely resembling normal driving. The Energy Department testing program was run on standard gasoline, E10, E15, and E20. The Energy Department test program was comprised of 86 vehicles operated up to 120,000 miles each using an industry-standard EPA-defined test cycle (called the Standard Road Cycle). The resulting Energy Department data showed no statistically significant loss of vehicle performance (emissions, fuel economy, and maintenance issues) attributable to the use of E15 fuel compared to straight gasoline. The Energy Department test program also showed that 10% engine leakdown is not a reliable indicator of vehicle performance. In the Energy Department program, there were vehicles found to exceed 10% leakdown for all fuels, including vehicles running on E0 and E10. There was no correlation between fuel type and leakdown, and high leakdown measurements did not correlate to degradation in engine or emissions performance. [U.S. Department of Energy, 5/16/12]

NREL: Study Found No Remarkable Degradation In Fuel Systems From Mid-'90s Car Models. The National Renewable Energy Laboratory (NREL) conducted a study on the impacts of using E10 and E17 gasoline ethanol blends on legacy fuel systems in Ford, GM, and Toyota vehicles produced in the mid-1990s. The study found that, though it was difficult to account for components' history given the age of the models, “no gross failures were observed” after being exposed to E17 and that “none of the systems indicated any major incompatibilities to E17”:

Overall, based on the results of both the fuel pump testing and the fuel injector testing, no major failures were observed that could be attributed to E17 exposure. There might be slightly more degradation in the Toyota fuel system component performance when using E17; however, this result is not certain due to the many factors described previously. Clearly, none of the systems indicated any gross incompatibilities to the E17. [National Renewable Energy Laboratory, March 2012]

MYTH: Ethanol Is Bad For The Environment 

• A post by Forbes contributor Robert Bradley Jr. claimed that though the RFS is intended to reduce greenhouse gas emissions, “in reality, the policy harms the environment by doing just the opposite.” [Forbes, 9/16/14]

• Time magazine's Bryan Walsh reported that “even next-generation biofuels may be worse for the climate than the fossil fuel-based sources they're meant to replace” and recycled a 2008 article's claim that “the massive subsidies for biofuels intended to reduce greenhouse gas emissions by cutting demand for oil actually had the opposite environmental effect.” [Time, 4/21/14]

• In an article about the “dirty cost of Obama's green power push,” the Associated Press reported that “the government's predictions on ethanol have proven so inaccurate that independent scientists question whether it will ever achieve its central environmental goal: reducing greenhouse gases.” [Associated Press, 11/12/13]

• The Wall Street Journal editorial board stated that “the ethanol lobby wants government to force a blend of E15 or higher on millions of consumers and force car makers to adapt their fleets to a fuel that offers less octane per mile traveled and no environmental benefit.” [The Wall Street Journal, 11/17/13]

FACT: Ethanol Emits Less Pollution, Is Better For Climate Than Conventional Fuel

Corn-Based Ethanol Produces Less Greenhouse Gas Emissions Over Full Life Cycle. A 2012 study by the Argonne National Laboratory conducted a life cycle analysis, which assesses the environmental impacts of all stages of a product's usage from extraction to disposal, and found that renewable fuels ultimately have a lower environmental impact than conventional fuels. The study determined that corn-based ethanol has achieved a lower climate change impact than gasoline, with emission reductions of up to 48 percent. Green Car Congress quoted from the study:

Bioethanol is the biofuel that is produced and consumed the most globally. The US is the dominant producer of corn-based ethanol, and Brazil is the dominant producer of sugarcane-based ethanol. Advances in technology and the resulting improved productivity in corn and sugarcane farming and ethanol conversion, together with biofuel policies, have contributed to the significantly expanded production of both types of ethanol in the past 20 years. These advances and improvements have helped bioethanol achieve increased energy and GHG emission benefits when compared with those of petroleum gasoline. [Green Car Congress, 1/22/13]

And Cellulosic Ethanol Is Even Better, Reducing Greenhouse Gas Emissions Up To 95 Percent. The Argonne Lab study further found that cellulosic ethanol, a type of fuel made from grasses or agricultural waste such as corn stalks, achieves the “greatest energy and GHG emission benefits” out of all the biofuels included in their study. The report analyzed cellulosic ethanol made from corn stover, switchgrass, and miscanthus and found that the resulting ethanol can reduce greenhouse gas emissions by as much as 95 percent:

[Green Car Congress, 1/22/13]

Increasing The Level Of Ethanol In Gasoline Reduces Smog And Risk Of Cancer. Life Cycle Associates, a business and environmental consulting firm, conducted a literature review of previous studies to perform a meta-analysis of the change in emissions that results when vehicles switch from E10 to E15. The study found that switching from E10 gasoline to E15 would reduce the amount of cancer-causing carcinogens emitted, resulting in an estimated 6.6 percent reduction in cancer risk. The report further found that switching to E15 reduces the smog-forming potential of gasoline and greenhouse gas emissions. From the report:

The most significant changes from a change from E10 to E15 include a reduction in cancer risk from vehicle exhaust and evaporative emissions, a reduction in the potential to form ozone or photochemical smog, and a reduction in greenhouse gas (GHG) emissions.

[...]

• Ethanol displaces the cancer causing components benzene and 1-3 butadiene from gasoline. Ethanol also displaces aromatics, which are precursors to cancer causing polycyclic aromatic hydrocarbons (PAHs). These changes in fuel composition affect both the vehicle exhaust as well as refueling evaporative emissions and evaporated spilled fuel. Therefore the weighted cancer effect from E15 is lower than that for E10.

• 67.5% of the cancer risk is due to lower 1-3 butadiene, and 75% of vehicles showed a reduction in this pollutant. 29% of the cancer risk is due to lower benzene emissions, and 88% of vehicles showed a reduction in this pollutant. Acetaldehyde emissions increased with higher ethanol blend levels. Changes in acetaldehyde result in a predicted 0.3% increase in cancer risk while the risk from other listed carcinogens drops by 6.9%, resulting in a net decrease of 6.6%.

• Ethanol present in the vehicle exhaust displaces higher smog forming potential hydrocarbons that result from gasoline components; therefore, for a given amount of NOx and NMHC emissions, the smog forming potential for E15 blends is lower.

• Ethanol results in a 1.5% reduction GHG emissions, which is proportional to amount of ethanol in the fuel. [Life Cycle Associates, 7/14]

MYTH: Ethanol Is Heavily Subsidized 

• In a Washington Examiner op-ed, the National Taxpayers Union's Nan Swift pushed against higher ethanol blends of E15 and E85, stating that "[e]thanol producers already enjoy a wealth of support, thanks to federally guaranteed sales courtesy of the Renewable Fuel Standard." [Washington Examiner, 11/7/14]

• In a U.S. News & World Report blog post, the president of the conservative Taxpayers for Common Sense asserted that "[t]he corn ethanol industry has received more than its fair share of subsidies over the past 30 years." [U.S. News & World Report, 3/12/14]

• A Washington Post editorial headlined “It's time to end the excessive subsidies for corn ethanol” stated that tax incentives for ethanol production cost the U.S. Treasury $6 billion in 2009 and that government subsidies for ethanol as a whole were “expensive” and “redundant.” [The Washington Post, 7/24/10]

FACT: Fossil Energy Subsidies Far Outweigh Renewable Fuel Subsidies 

Oil And Gas Have Received The Majority Of Federal Support Historically -- $490 Billion Total. An analysis by Management Information Services for the Nuclear Energy Institute, an organization affiliated with the nuclear industry, found that oil and gas have received “almost 60 percent ($490 billion) of federal spending to support energy since 1950. Oil alone received three-fourths ($369 billion) of this amount”:

[Nuclear Energy Institute, 10/11]

Oil And Gas Received Greater Share Of Subsidies During Crucial Development Period. According to a 2011 study from venture capital firm DBL Investors on inflation-adjusted energy subsidy spending, “federal commitment to [oil and gas] was five times greater than the federal commitment to renewables during the first 15 years of each subsidies' life,” a crucial period where government support can aid long-term success. The report included the following chart showing that oil and gas subsidies have helped the fossil fuel industries for nearly a century, while renewable subsidies are helping the emerging industry scale up:

[DBL Investors, 9/11]

Fossil Fuels Still Receive Substantial Subsidies. The Environmental Law Institute (ELI) conducted an analysis comparing the total subsidies awarded to fossil fuels and renewable fuels from 2002 to 2008:

Applying a conservative approach, explained in further detail below, ELI found that

• The vast majority of federal subsidies for fossil fuels and renewable energy supported energy sources that emit high levels of greenhouse gases when used as fuel.

• The federal government provided substantially larger subsidies to fossil fuels than to renewables.Subsidies to fossil fuels -- a mature, developed industry that has enjoyed government support for many years-- totaled approximately $72 billion over the study period, representing a direct cost to taxpayers.

• Subsidies for renewable fuels, a relatively young and developing industry, totaled $29 billion over the same period.

• Subsidies to fossil fuels generally increased over the study period (though they decreased in 2008), while funding for renewables increased but saw a precipitous drop in 2006-07 (though they increased in 2008).

• Most of the largest subsidies to fossil fuels were written into the U.S. Tax Code as permanent provisions. By comparison, many subsidies for renewables are time-limited initiatives implemented through energy bills, with expiration dates that limit their usefulness to the renewables industry.

• The vast majority of subsidy dollars to fossil fuels can be attributed to just a handful of tax breaks, such as the Foreign Tax Credit ($15.3 billion) and the Credit for Production of Nonconventional Fuels ($14.1 billion). The largest of these, the Foreign Tax Credit, applies to the overseas production of oil through an obscure provision of the Tax Code, which allows energy companies to claim a tax credit for payments that would normally receive less-beneficial tax treatment.

• Almost half of the subsidies for renewables are attributable to corn-based ethanol, the use of which, while decreasing American reliance on foreign oil, raises considerable questions about effects on climate.

ELI published this chart depicting the study's findings:

[Environmental Law Institute, 9/09; Environmental Law Institute, 9/09]

Obama Proposed Eliminating $40 Billion In Oil And Gas Subsidies -- And Failed. For the last several years, President Obama has attempted to eliminate eight tax breaks for the oil and gas sectors that add up to $38.6 billion over 10 years, according to the Congressional Research Service:

[Congressional Research Service, March 2012]