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Untangling The Political And Policy Knot Around America’s Biofuel Mandate

By Jeff Spross  

"Untangling The Political And Policy Knot Around America’s Biofuel Mandate"

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(Credit: Russell Gold/The Wall Street Journal)

A two-day House hearing this week ramped up debate over America’s biofuel standards, revealing a tangled knot of conflicting motives. The gathering of the House Energy and Commerce Committee’s Subcommittee on Energy and Power was the latest milestone in a year-long evaluation of the renewable fuel standard (RFS), which mandates that the U.S. fuel supply contain a certain amount of ethanol produced from biofuel. Broadly speaking, it pits the Renewable Fuels Association and biofuel producers against oil companies, refiners, and their representatives — and they all even broke out dueling ad campaigns for the occasion.

On a more granular level, it’s a bit more complicated. Defying the assumed liberal-conservative split on renewables, several Senate Democrats have gotten in on the discussion by calling for revisions to the RFS, or for the White House to temporarily waive some of its mandates. National Journal reports those lawmakers are hearing from oil refineries in their districts that face mounting infrastructure costs related to the blending, and from poultry farmers seeing the price of their feed go up as biofuel production bites into corn supplies.

Positions amongst the RFS’ critics are hardly uniform either. Two very big oil companies — Shell and BP — have both invested in advanced biofuel ventures, and don’t go beyond calling for the standard to be revised. Other smaller firms in the “just revise it” camp point out that eliminating the RFS would waste the potential in the industry for further advancement. But other players like ExxonMobile, as well as the oil industry’s top trade groups — The American Petroleum Institute and the American Fuel and Petrochemical Manufacturers group — insist the RFS is unsalvageable and should utterly scrapped.

The problem is that while the RFS aims for a national fuel supply of approximately 10 percent ethanol, it’s actual legislative language — which Congress created in 2005 and updated in 2007 — lays out the mandate in hard gallon amounts. But that number was based on projections of future gasoline consumption that turned out to be way off. As a result, the required amount of ethanol is threatening to overrun the 10 percent threshold. That’s the “blend wall” — the maximum amount most cars or trucks are designed to tolerate in their fuel mix. More advanced cars that can handle a 15 percent mix have only been moving into the market since 2001.

Then there’s the requirement that a certain portion of that amount include more advanced cellulosic biofuels, which don’t compete with human food supplies. And unfortunately, the industry’s ability to produce those biofuels has grossly failed to keep up with the RFS’ requirements.

Of course, it can be argued that’s a good thing. As Adam Monroe, resident of Novozymes North America, pointed out, “Brazilians drive cars on 18 percent to 25 percent ethanol made by Ford & GM.” A steadily increasing percentage would certainly incentivize faster technological advancements in vehicles, and a simple fix to the legislative language from a gallon requirement to a percentage one would seem to address the main concerns. Meanwhile, the motivations and interests behind opposition to the RFS — which revolve around avoiding spending money on upgrades and protecting incumbent industrial market positions — are hardly noble.

But there are deeper problems. When the full agricultural practices needed to harvest biofuels are taken into account, as well as the forrest and grassland clearing that often makes way for the crops, it’s not clear that biofuels actually produce any clear benefits in reducing carbon emissions at present. Worse, traditional biofuel production drives up demand for corn, thus driving up the price and leading to food shortages. That’s a problem here in the United States — see the aforementioned poultry farmers with expensive feed costs — but it’s been devastating worldwide.

In Guatemala, for example, a study suggested the price of corn was driven up 17 percent by U.S. policies, helping create a country where 50 percent of the children are malnourished. Other studies found that biofuels were a contributor to the 2008 food crisis.

There are technologies on the horizon that could address these problems, but their long-term commercial viability is still an open question. And even under the best conditions, it’s unlikely that biofuels would be a large part of the fuel mix in a clean economy.

In short, there’s a valid argument for scrapping the RFS, but most of the proponents of that move are pushing it for the wrong reasons. Meanwhile, the argument in favor of the RFS is that it’s driving a necessary reform in our economy — but in a very, very problemmatic way compared to something like a carbon tax that included transportation fuel.

Such is the nature of American politics.

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2 Responses to Untangling The Political And Policy Knot Around America’s Biofuel Mandate

  1. M Tucker says:

    We have created a Gordian Knot and, like that knot, it has no easy solution. We created a whole new market for corn. We created a new industry to convert that corn to ethanol. We created artificial demand and we subsidize the whole thing. BRILLIANT!

  2. Merrelyn Emery says:

    Just get over it and get on with improving EVs, charging stations and get them to everybody at a subsidized, affordable price, ME