IOWA is the nation’s top producer of corn, and nearly half of it ends up as ethanol, thanks to a government mandate that requires ethanol to be mixed into gasoline. The mandate is worth hundreds of millions of dollars to farmers there.
No wonder most Iowans talk it up, as do most of the presidential candidates campaigning there in the lead up to the caucuses.
Ethanol thrives because of the volume-based approach of the mandate, which specifies that a growing percentage of various renewable fuels must be mixed into gasoline every year until 2022.
But that approach has stifled innovation and, if its track record to date is any indication, biofuels will not be a major player in meeting our 2050 targets for reducing greenhouse gas emissions from cars and trucks.
What we should be talking about is a performance-based approach to developing gasoline substitutes that will reduce emissions. We’ve had much greater success using this approach and allowing the market to decide which technology works best to meet a target set by the government.
For instance, when the Environmental Protection Agency set 2025 limits for greenhouse gas emissions for cars at half of 2008 levels, automakers were given flexibility on how to make that happen. Some companies are investing heavily in electric vehicles; others are focusing on hybrids and fuel cells. So far, all have met their interim goals.
Not so with the ethanol mandate, which requires that 36 billion gallons of biofuels must be mixed into gasoline by 2022. Of that, about 85 percent of that blend is supposed to come from a nearly even mix of corn ethanol and cellulosics (derived from wood chips, corn stover, grasses and other nonedible plant parts).
But that’s not what is happening. Because corn ethanol is cheap and easy to produce and was already in use as a gasoline additive before the mandate was imposed, and because existing corn ethanol plants are exempted from greenhouse gas emissions requirements, production has vastly exceeded that of cellulosic ethanol. In 2014, less than 2 percent of the mandated volume of cellulosics was produced.
This is a problem. At best, corn ethanol provides a 20 percent reduction in greenhouse gas pollution over gasoline, while cellulosic fuel produces an 80 percent reduction in that pollution and doesn’t compete with food.
The cellulosic industry has taken much longer to get off the ground than Congress anticipated. Production of this fuel is more complex and costly and requires significant upfront investments.
If we could start again from zero, a performance-based standard would produce better results. Setting the standard based on how clean the fuel should be would give companies the flexibility to figure out how to reach the target.
This is already being done in California and Oregon, which have performance-based fuel standards. The California program, for instance, requires fuel producers to reduce greenhouse gas pollution by 10 percent in transportation fuels in 2020. Because it is technology neutral, and interested only in the result, this approach supports investments in the cleanest fuels while providing maximum flexibility to the industry to develop them.
Still, the existing federal fuel standard, as imperfect as it may be, is now an essential component of our efforts to reduce greenhouse gas emissions and slow climate change.
To move forward, the E.P.A. should phase in the fuel standard mandate in a predictable way to provide a growing market for advanced and cellulosic renewable fuels. We also need to shift tax policy for cellulosic fuels to support long-term investment similar to the tax policies for wind and solar power. And we need several more states to adopt performance-based standards, and to support investment to encourage the development of the next generation of renewable fuels.
The United States needs to reduce carbon pollution from cars and trucks by 80 percent by 2050. Advances in propulsion technology alone will not be enough to meet that goal. Passenger cars will have to not only go farther on less fuel, but also travel those miles on lower-carbon fuel.
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