Iowans celebrated an unofficial holiday this past week — the return of E15 fuel.
To hear some Iowa politicians tell it, the availability of gasoline with 15 percent ethanol is almost as great as Christmas. The same day the concoction returned to Iowa fuel pumps, Gov. Kim Reynolds posted a photo on Twitter of her fueling a pickup truck. She wrote, “I’m proud to fill up with E15 today and support our Iowa farmers who feed & fuel the world.”
The federal Renewable Fuel Standard requires fuel producers to include 10 percent ethanol, an alternative fuel produced with corn grown in Iowa and elsewhere. E15, with more of the same ingredient, is not available in most areas during the summer, with the annual restriction expiring a week ago.
Ethanol advocates sometimes say the federal government bans E15 during the summer months, but in reality the blend only faces more regulations in the summer, making it uneconomical to sell. It would be more accurate to say most gasoline with no biofuel component is banned under the Renewable Fuel Standard all year, although in some cases refiners can purchase renewable fuel credits to forego the requirement.
Iowa leaders are quick to tout the benefits of higher concentration of ethanol in our gas. There’s evidence it burns cleaner than traditional fuel, promoting better air quality. Switching to E15 year-round would create more than 100,000 jobs and cut 7 billion gallons from the nation’s foreign oil consumption annually, according to the Iowa Renewable Fuels Association.
President Donald Trump said during a visit to Iowa this year he is open to lifting the restrictions on year-round E15. However, there are plenty of criticisms of ethanol as well, promoted by a peculiar alliance of environmentalists, oil industry insiders and free-market economists.
Government mandates always distort markets, both in intended and unintended ways. In this case, the ethanol mandate increases demand for corn, which ultimately drives up the price of food products, and also incentivizes farmers to plant more corn than they otherwise would.
In the first four years after the Renewable Fuel Standard was imposed in 2005, more than 7 million acres of land were converted to cropland in order to meet the demand for corn created by the rules, according to the left-leaning Sierra Club, which also estimates 40 percent of the U.S. corn crop goes toward fuel production. Turning prairies and pastures into cornfields also contributes to harmful runoff and increased energy consumption on agriculture, conservationists say.
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“Given what we know about how the production of corn ethanol impacts communities and the environment, it’s unconscionable that the EPA continues to turn a blind eye to this burgeoning environmental crisis,” Sierra Club legislative director Andrew Linhardt after the group filed a lawsuit against the EPA last year.
What’s more, the Renewable Fuel Standard is a “hidden tax on gasoline,” according to a 2015 study by the right-leaning Manhattan Institute. Ethanol might be cheaper by volume than gasoline, which is why ethanol blends cost less at the pump, but research shows ethanol is actually more expensive per unit of energy than traditional gasoline. By the Manhattan Institute’s calculations, ethanol cost more than twice as much than an energy-equivalent amount of gasoline in 2015.
Robert Bryce, the author of the Manhattan Institute report, has said “the biofuel scam is worse than Solyndra,” invoking the Obama-era bankruptcy of a solar panel component corporation.
Never mind all those pesky facts, though. The policy debate over fuel standards is less about reality and more about politics. Heartland states — especially Iowa, with our first-in-the-nation caucuses and a crop of influential Republican politicians — want more biofuels to support agriculture. Meanwhile, oil-producing states — especially Texas, with its massive population and 36 U.S. representatives — are opposed to diluting fuel with other products.
The debate has driven a rift between politicians from corn states and oil states. U.S. Sen, Ted Cruz, a Texas Republican, last year temporarily blocked the nomination of former Iowa Agriculture Sec. Bill Northey as part of deliberations over fuel regulations.
Conventional political wisdom, which is not always very wise, suggests criticizing ethanol is a non-starter among Iowa voters. Yet Cruz was a critic of biofuel requirements before the 2016 Iowa caucuses, and still managed to finish first with 27 percent of Republican caucusgoers support in a crowded field. Perhaps King Corn is getting a demotion.
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