The Free Press, Mankato, MN

December 18, 2013

Our View: Be sensible on ethanol mandate

Why it matters: Ethanol has long been a boon to rural development.

The Mankato Free Press

---- — Solid bipartisan majorities in Congress in 2005 and again in 2007 enthusiastically supported a mandate for oil refiners to use more renewable fuels in their gasoline.

In fact, we can’t remember the oil companies putting up too much of a fuss either.

But all that appears to have changed as the Democratic administration of President Obama is proposing to lower the amount of corn ethanol used under the Renewable Fuels Standard endorsed far and wide just a few short years ago.

At that time, we were not far removed from the 911 attacks and we were about two years into a brutal Iraq War. Those events led many Americans and their political leaders to believe the sooner we can free ourselves from the dependence on foreign oil the better.

But the Environmental Protection Agency has proposed lowering the mandated use of ethanol by about 10 percent from its original target for 2014 and about 15 percent for all renewable fuels.

Those reductions seem out of line and are not likely commensurate with how much better Americans are feeling about our energy independence. Several Minnesota elected leaders in Congress, including Sens. Amy Klobuchar and Al Franken oppose the change, as do Reps. Tim Walz and Collin Peterson.

The oil industry, of course, is the biggest force pushing the change in standards. A reduction in the mandated use of ethanol would lower costs and increase profits for oil companies. They’ve been proffering a smattering of arguments where it’s difficult to see how they are looking out for anyone but themselves.

They argue that because gas prices are down, and we’re now producing more domestic oil, and fuel consumption overall is down, we don’t really need the renewable fuels mandate. They’d like to see it disappear altogether.

They’ve been joined by some environmental groups who, with some misplaced fervor, have jumped on a bandwagon of thought recently that suggests using a renewable fuel instead of depleting supplies of fossil fuels is better for the environment.

The facts suggest the Renewable Fuels Standard benefits rural America job creation, gasoline consumers and the environment. A peer-reviewed study by Argonne National Laboratory concluded that corn ethanol reduces greenhouse gas emissions by 34 percent compared to petroleum based gasoline.

The Department of Energy estimates every 1 billion gallons of ethanol produced creates 10,000 to 20,000 jobs and save consumers about $35 billion a year in fuel costs.

Can there be a reasonable middle ground here? We think so. Gasoline consumption is down so it seems keeping ethanol a constant percentage of that consumption level is reasonable. But according to the Energy Department, gasoline consumption is down only about 4 percent since 2005, so 10 and 15 percent reduction in the ethanol use is out of sync.

The RFS was not only approved with widespread support because it would help us break out imported fuel addiction — a word Texas oilman George W. Bush used — but also diversify the choices American consumers have at the pump. Ethanol and other renewable fuels create healthy competition for oil.

The goal was also to help give investors some confidence that new renewable fuel technologies could produce marketable products that would offer a return on investment.

Ethanol is not a perfect renewable fuel. Far from it. But it has shown investors that renewable fuels can work and find strong positions in the marketplace. It is helping pave the way for cellulosic renewable fuels, which will be derived from raw products that have much less environmental issues than those associated with the energy needed to produce corn.

It’s academic that corn ethanol requires corn and therefore increases demand and the price of corn. So others who chose to buy corn are faced with a higher price. This impacts consumers of food and livestock producers who use corn for feed. But the increases are consistent with normal fluctuations and could be explained in part by other factors that impact the price of corn such as the weather.

In the end, curtailing the ethanol requirement in such a major way doesn’t make business or environmental sense.