Dumb Policies Just Keep Coming

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Townhall:

Dumb Policies Just Keep Coming
PAUL DRIESSEN

If 10% ethanol in gasoline is good, 15% (E15) will be even better. At least for some folks.

We’re certainly heading in that direction – thanks to animosity toward oil, natural gas and coal, fear-mongering about global warming, and superlative lobbying for “alternative,” “affordable,” “eco-friendly” biofuels. Whether the trend continues, and what unintended consequences will be unleashed, will depend on Corn Belt versus consumer politics and whether more people recognize the downsides of ethanol.

Federal laws currently require that fuel suppliers blend more and more ethanol into gasoline, until the annual total rises from 9 billion gallons of EtOH in 2008 to 36 billion in 2022. The national Renewable Fuel Standard (RFS) also mandates that corn-based ethanol tops out at 15 billion gallons a year, and the rest comes from “advanced biofuels” – fuels produced from switchgrass, forest products and other non-corn feedstocks, and having 50% lower lifecycle greenhouse gas emissions than petroleum.

These “advanced biofuels” thus far exist only on paper or in laboratories and demonstration projects. But Congress apparently believes passing a law will turn wishes into horses and mandates into reality.

Create the demand, say ethanol activists, and the supply will follow. In plain-spoken English: Impose the mandates and provide sufficient subsidies, and ethanol producers will gladly “earn” billions growing crops, building facilities and distilling fuel.

Thus, ADM, Cargill, POET bio-energy and the Growth Energy coalition will benefit from RFS and other mandates, loan guarantees, tax credits and direct subsidies. Automobile and other manufacturers will sell new lines of vehicles and equipment to replace soon-to-be-obsolete models that cannot handle E15 blends. Lawmakers who nourish the arrangement will continue receiving hefty campaign contributions from Big Farma.

However, voter anger over subsidies and deficits bode ill for the status quo. So POET doubled its Capital Hill lobbying budget in 2010, and the ethanol industry has launched a full-court press to have the Senate, Congress and Environmental Protection Agency raise the ethanol-in-gasoline limit to 15% ASAP. As their anxiety levels have risen, some lobbyists are suggesting a compromise at 12% (E12).

Not surprisingly, ethanol activism is resisted by people on the other side of the ledger – those who will pay the tab, and those who worry about the environmental impacts of ethanol production and use.