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BEAUPREZ: EPA’s renewable fuel folly

Corn is good for cattle, but bad for cars

- - Thursday, August 15, 2013

After a nine-month delay, the Environmental Protection Agency on Aug. 6 finally revealed the amount of ethanol that is expected to be blended into gasoline in 2013.

Yes, this is August, the eighth month of the year. Yes, the EPA did give refiners an extra four months to meet the target of 16.5 billion gallons of renewable fuel. However, the agency's announcement is too little, too late. Issuing the mandated ethanol level now can be likened to putting a Band-Aid on the patient after last rites have been read.

The ethanol mandate is one of the most convoluted and unworkable programs ever enacted by the U.S. Congress. Those of us who served in Congress and voted for it remember that it was supposed to improve air quality, promote the fledging U.S. ethanol industry, and reduce dependence on foreign oil by adding home-grown ethanol to the nation's fuel supply.

While our intentions were good, the Renewable Fuel Standard has become a self-inflicted wound. The ethanol mandate has sent corn prices skyrocketing, harmed cattle and poultry producers, forced refiners to waste money on ethanol credits, and hiked food prices worldwide. In fact, some observers say the mandate contributed to the "unrest and upheaval" during the Arab Spring uprisings because it raised bread and other food prices.

How has one well-meaning law created so much havoc? It has led to the burning of food for fuel, consuming roughly 42 percent of the U.S. corn crop for ethanol production. That's more than the amount of corn used to feed livestock and poultry in the United States, resulting in great market volatility and a regulatory nightmare that is only tangentially connected to reality.

First, there's the "blend wall" problem. Refiners are supposed to blend ethanol into motor fuel up to a concentration of 10 percent. When the law was passed, everyone thought gasoline demand would rise indefinitely, making it possible for ever-increasing amounts of ethanol to be added to the nation's fuel supply. Instead, gasoline demand fell. Now refiners are not making enough gasoline to mix with the amount of ethanol they are expected to blend. Simply put, they have hit the wall.

To remain in compliance with the mandate, refiners have the option of purchasing ethanol credits called Renewable Identification Numbers (RINs). Since the beginning of the year, RIN prices have climbed from 7 cents to a high of $1.43 on July 17. As one observer has calculated, the RINs have added about a dime to motorists' price at the pump.

Then there's the cellulosic ethanol mandate. In hopes of spurring the development of fuel from wood chips and switchgrass, refiners are required to mix cellulosic ethanol into motor fuel. However, no commercial quantities of cellulosic ethanol have been produced — ever. Yet the EPA has been levying millions of dollars in fines against oil companies each year for failing to buy and use the nonexistent fuel.

Never known to let the facts stand in the way, however, the EPA announced it is reducing the 2013 cellulosic ethanol mandate from 14 million gallons to 6 million gallons. This bit of charity is absurd. Even EPA's own data show absolutely no cellulosic ethanol is available.

With the agency's high expectations for ethanol collapsing, the agency devised another way to force ethanol into our fuel. It granted a partial waiver for the sale of E15, a motor fuel that contains 15 percent ethanol and 85 percent gasoline, and it approved the fuel for use in 2001 and later-model cars and trucks.

These vehicles can suffer serious mechanical problems with E15. A study by the Coordinating Research Council, a well-respected engineering group, tested vehicles powered by fuels containing more than 10 percent ethanol and found it can destroy parts and lead to engine failure. Outdoor-equipment manufacturers also say E15 should not be used in lawn mowers, chain saws and other similar devices.

Here's the bottom line. The administration and the EPA cannot continue to apply Band-Aids to this epic policy failure. As Jack Gerard, president and CEO of the American Petroleum Institute, said in a statement, "Now it's up to Congress to exercise leadership and move quickly to end this dangerous mandate before it hurts consumers, damages vehicles and harms our economy."

Sen. James M. Inhofe, Oklahoma Republican, agrees: "The president has chosen to put his environmental allies ahead of the millions of Americans who may face damaged engines and fuel infrastructure because of unsafe levels of ethanol in gasoline. Congress needs to repeal the broken renewable-fuel standard."

Sometimes, the wisest approach to a difficult and costly problem is to admit failure. It's time to repeal the law and move on.

Bob Beauprez is a former Republican member of the House of Representatives from Colorado.