In dispelling misconceptions surrounding ethanol and the Renewable Fuel Standard, there’s so much to address that I must cut to the chase.
In the end, though, I hope your take away is the same as mine; there’s a place at the pump for ethanol, petroleum and other fuels. We just don’t want ethanol to lose its place due to misinformation and false perceptions.
First off, the Renewable Fuel Standard (RFS) isn’t a “subsidy.” There’s no impact on the federal budget or tax revenues. It’s a program guaranteeing that lower-carbon, U.S.-produced biofuels have access in a market that’s dominated by petroleum.
Secondly, there’s no “ethanol mandate.” The RFS requires oil companies to blend volumes of renewable fuels, without specifying what type. Oil companies can meet RFS obligations by blending biogas, biodiesel or other renewables, but ethanol remains the highest-volume, lowest-cost option.
Furthermore, there’s no “ethanol production subsidy.” Programs like the “Blender’s Tax Credit” expired five years ago, and in that case, it was gasoline blenders – not ethanol producers – who received credits for blending ethanol into gasoline.
Some say the Biofuel Infrastructure Partnership program is proof ethanol benefits from federal dollars. The U.S. Department of Agriculture indeed recently pledged $100 million in matching funds to help stations build infrastructure for higher-ethanol blends (in a market that, again, is dominated by petroleum).
But what about the oil industry – receiving $4-5 billion annually in tax breaks, including programs that have existed 100 years?
That’s why it’s frustrating to hear ethanol demonized as “overly subsidized” when it’s not, and when it’s doing so much good.
Oxygenating gasoline is required under Clean Air Act amendments, and ethanol – with its clean-burning qualities – is regarded as the best additive for that. Adding 10 percent ethanol to gasoline (E10) helps many cities achieve Clean Air requirements they otherwise couldn’t.
In 2015, ethanol was credited with lowering CO2-equivalent greenhouse gas emissions from transportation by 41.2 million metric tons – akin to removing 8.7 million cars from our roads.
Additionally, the 14.8 billion gallons of ethanol domestically produced in 2015 lowered net U.S. import petroleum dependence to 25 percent, which otherwise would have been 32 percent.
Last year, ethanol supported 85,967 direct jobs, added $44 billion to our GDP, and increased household income by $24 billion.
The increase in overall fuel supplies with ethanol being blended with gasoline helps lower prices at the pump, by anywhere from 50 cents to $1.50 per gallon.
Food prices haven’t skyrocketed with corn going toward ethanol. First off, only 17 cents of every dollar pays for the value of farm products in groceries, while the remaining 83 covers transportation and other costs. U.S. consumers still spend just under 10 percent of their disposable income on food – same as it’s been for 15 years, and still the lowest percentage worldwide. Even with corn going into ethanol, the U.S. has supplies for biofuels and food, and carries over 1.5-2 billion bushels annually.
Corn going into ethanol doesn’t significantly impact global land use. Land dedicated to coarse grains (corn, sorghum and others) actually decreased 6.5 percent worldwide from 1980 to 2015. But while global land for grains decreased, production increased 73.5 percent in the same timeframe.
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