Should Congress end ethanol subsidies? No

No: Keep them for now but change law
2013-01-14T00:00:00Z 2013-01-14T06:54:37Z Should Congress end ethanol subsidies? No Arizona Daily Star
January 14, 2013 12:00 am

The federal requirement for use of ethanol in gasoline was widely criticized in 2012. With a prolonged drought that reduced the production of corn used to make ethanol, the mandate drove up corn prices and the cost of livestock feed and contributed to global food scarcity.

In response, many called for a temporary suspension of the ethanol mandate, but it wasn't to be.

The U.S. Environmental Protection Agency said it could not waive the requirement because Congress permitted such an action only if the fuel rule "severely" harms the economy. EPA concluded that was not the case in 2012.

What exactly is the ethanol mandate, and should it be kept as it is, be reformed or discarded?

The mandate, called the Renewable Fuel Standard, dates back to 2005, when it was created as part of the Energy Policy Act. Congress expanded the requirement in 2007 with passage of the Energy Independence and Security Act.

The fuel standard after 2007 required a gradual increase in the volume of fuel derived from renewable sources to be blended into transportation fuel - rising to 36 billion gallons by 2022.

The 2007 act also called for the EPA to work toward reduced emissions of greenhouse gases from fuel. So the mandate has two related goals: reducing dependence on imported oil and lowering emissions linked to climate change.

U.S. dependence on imported oil has declined substantially, reflecting in part the recent economic downturn, but also improving vehicle fuel efficiency and increased domestic production of oil.

The nation's greenhouse gas emissions declined as well for some of the same reasons as well as a switch to use of natural gas.

Given these results, the renewable fuel mandate is a successful policy, right? Not entirely.

The program remains inflexible and relies too much on use of corn.

Using corn for fuel undercuts much of the anticipated savings in energy and greenhouse gas emissions, particularly since non-food sources can be used instead.

As it is now designed, the ethanol policy benefits farmers and the ethanol industry more than it does the public. Converting corn to fuel consumes some 40 percent of the U.S. corn crop. Under drought conditions, as we had in 2012, the result can be a sharp spike in corn prices.

What should we do? Congress could rewrite the renewable fuel mandate in a way that discourages the use of corn to make ethanol and encourages production of renewable fuels made from non-food sources, such as agricultural residues and wood chips.

There is a strong potential over time for such biofuel production.

Given these alternatives, we should keep the federal ethanol requirement for its desirable goals of reducing reliance on imported oil and limiting greenhouse gas emissions. But we also should change the rules gradually to move away from use of corn.

Editor's note

Every Monday we offer pro/con pieces from the McClatchy-Tribune News Service to give readers a broad view of issues.

Michael E. Kraft is professor emeritus of political science and public and environmental affairs at the University of Wisconsin-Green Bay. Email:

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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