Study: U.S. Biofuels Policies Flawed

The U.S. needs to fundamentally rethink its policy of promoting ethanol to diversify its energy sources and increase energy security, according to a new policy paper by Rice University’s Baker Institute for Public Policy.

The paper, "Fundamentals of a Sustainable U.S. Biofuels Policy," questions the economic, environmental and logistical basis for the billions of dollars in federal subsidies and protectionist tariffs that go to domestic ethanol producers every year. "We need to set realistic targets for ethanol in the United States instead of just throwing taxpayer money out the window," said Amy Myers Jaffe, one of the report’s authors.

Jaffe is a fellow in energy studies at the Baker Institute and associate director of the Rice Energy Program.

As an example of the unintended economic consequences of U.S. biofuels policy, the report notes that in 2008 "the U.S. government spent $4 billion in biofuels subsidies to replace roughly 2 percent of the U.S. gasoline supply. The average cost to the taxpayer of those ‘substituted’ barrels of gasoline was roughly $82 a barrel, or $1.95 per gallon on top of the retail gasoline price (i.e., what consumers pay at the pump)." The report questions whether mandated volumes for biofuels can be met and whether biofuels are improving the environment or energy security.

The report, which includes analysis by environmental scientists, highlights the environmental threats posed by current biofuels policy. "Increases in corn-based ethanol production in the Midwest could cause an increase in detrimental regional environmental impacts," the study states, "including exacerbating damage to ecosystems and fisheries along the Mississippi River and in the Gulf of Mexico and creating water shortages in some areas experiencing significant increases in fuel crop irrigation." Moreover, the report challenges claims that ethanol use lowers greenhouse gas (GHG) emissions and argues, "There is no scientific consensus on the climate-friendly nature of U.S.-produced corn-based ethanol, and it should not be credited with reducing GHGs when compared to the burning of traditional gasoline."

In 2007, Congress passed the Energy Independence and Security Act (EISA) that mandated production targets for "renewable fuels," mainly biodiesel and ethanol. The bill mandated ambitious production targets of 9 billion gallons of biofuels a year in 2008 and rising to 36 billion gallons a year by 2022. Corn ethanol is capped at 15 billion gallons a year in the law, but even that level will be difficult to reach given logistical and commercial barriers, according to the study. The Baker Institute report finds, however, that the use of flex-fuel vehicles is not likely to be extensive enough to overcome the barriers to achieving the Energy Independence and Security Act of 2007 mandates for U.S. ethanol market saturation.

The EISA also called for 21 billion gallons of advanced biofuels, produced from sources like switchgrass, corn stover and algae, to be used in the nation’s fuel supply by 2022. But the report determines "existing mandated targets for advanced biofuels are not currently achievable — scientifically or commercially — and should be revisited."

As a result, the report’s authors wrote, "we encourage Congress to revisit these mandates and revise them to be in line with realizable targets and time frames to create an improved policy that will reduce uncertainty for refiners and allow a more orderly implementation of achievable goals and mandates by the EPA."

Finally, the report questions the tariff imposed on ethanol imported from Latin America and the Caribbean. Because sustainable production of U.S. domestic corn-based ethanol faces limitations, the report finds "tariff policies that block cheaper imports are probably misguided." As a result, the report states that, "we believe on balance that the economic and geopolitical benefits to this trade with select regional suppliers would outweigh any ‘energy security’ costs to having some larger percentage of U.S. ethanol supplies arriving from foreign sources."

In addition to Jaffe, the report’s authors include Pedro J. Alvarez, the George R. Brown Professor and chair of the Department of Civil and Environmental Engineering; James Coan, Baker Institute Energy Forum research associate; Marcelo E. Dias de Oliveira, consultant to the Baker Institute; Rosa Dominguez-Faus, graduate student researcher in the Department of Civil and Environmental Engineering; Diego E. Gomez, graduate student researcher in the Department of Civil and Environmental Engineering; Kenneth Medlock, the James A. Baker III and Susan G. Baker Fellow in Energy and Resource Economics at the Baker Institute; Ronald Soligo, Baker Institute Scholar and professor of economics; Lauren Smulcer, Baker Institute Energy Forum research associate; Joel G. Burken, professor of civil, architectural, and environmental engineering at the Missouri University of Science and Technology; and Susan E. Powers, professor of environmental engineering and associate dean of the Coulter School of Engineering at Clarkson University.

The study was supported by a research grant in environmental engineering from Chevron Technology Ventures.

To read the complete study, click here.

Topics: ,

Leave a Reply

One comment on “Study: U.S. Biofuels Policies Flawed

  1. I am really glad you had the “GUTS” to publish this information, which is not politically motivated, and which objectively evaluates the problems with current biofuels programs which are taxpayer supported and not an answer to our environmental problems.

Management Stories
ManagementMACA 2014: The State Of The Agricultural Industry, And Then Some
October 9, 2014
The trade association’s annual gathering featured speakers from across agriculture and beyond. Read More
StewardshipA Multi-Layered Approach To Water Quality
October 6, 2014
Illinois event highlights research and technology designed to better monitor and improve water quality — and the benefits of cooperative, coordinated effort. Read More
StewardshipMichigan Agriculture Leaders On Toledo Water Ban: We Want To Be Part Of The Conversation
August 8, 2014
Leaders of Michigan agricultural organizations said Thursday that the government should not have a “knee-jerk reaction” based on last weekend’s water ban in Toledo due to fertilizer run-off in Lake Erie. Read More
ManagementRussia Bans U.S. And EU Ag Product Imports In Ukraine Sanctions Battle
August 7, 2014
Russian President Vladimir Putin has banned the import of agricultural goods from countries that have imposed sanctions on Russia. Read More
Top 100 Articles
Milan Kucerak, president/CEO, West Central
CropLife 100West Central Cooperative And Its New President Are A Match Made In Deviation
June 29, 2015
To appreciate just how unique West Central Cooperative is in the world of ag retail, an observer need only consider Read More
Winter Wheat
CropLife 100South Dakota Co-op Member Owners Vote No On Unification
June 26, 2015
The Boards of Directors for North Central Farmers Elevator (NCFE) and Wheat Growers (WG) have announced that member-owners have voted Read More
CropLife 100The Andersons Acquires South Dakota Plant Nutrient Manufacturer Kay-Flo
May 20, 2015
The Andersons, Inc., ranked No. 22 on the CropLife 100, has purchased Kay Flo Industries of North Sioux City, SD. “This Read More
CropLife 100North Central Farmers Elevator, Wheat Growers Unification Approved By Board, Still Awaits Member Approval
May 13, 2015
The Boards of Directors for North Central Farmers Elevator (NCFE) and Wheat Growers (WG) have voted to approve the Unification Read More
CropLife 100AgGateway’s Barcoding Initiative Progressing Nicely
May 8, 2015
According to legend (or Wikipedia), the first step towards modern bar codes came back in 1948, when Bernard Silver, a Read More
CropLife 100Pinnacle Agriculture Acquires Minnesota Retailer
April 14, 2015
Pinnacle Agriculture Holdings, LLC, ranked No. 6 on the CropLife 100,  has successfully acquired Liebl Ag, LLC in Ada, MN.  Read More
Latest News
The McGregor Co. fertilizer loadout
Retail FacilitiesThe McGregor Co. Partners With Kahler Automation To Cre…
June 30, 2015
Kahler Automation helped The McGregor Co. expand its Clarkston, WA, operation with unstaffed loadout technology that enables customers to pick Read More
Dry and Liquid Plant
Retail FacilitiesKahler Automation Helps CHS Dakota Ag Cooperative Build…
June 30, 2015
CHS Dakota Ag Cooperative in Mooreton, ND, wanted a liquid/dry blender system that could meet the needs of its customers Read More
Crop InputsLand O’Lakes, United Suppliers To Merge Crop Inpu…
June 29, 2015
Land O’Lakes, Inc. and United Suppliers, Inc. of Ames, IA, today announced their intent to merge their crop inputs businesses. Read More
FungicidesHelena To Distribute Unique Summit Agro Fungicide
June 29, 2015
RANMAN 400 SC fungicide, the only fungicide with a FRAC group 21 designation, is now part of the innovative Summit Read More
Eric SfiligojIARC Targets 2,4-D In Latest Report
June 29, 2015
The International Agency for Research on Cancer (IARC) has struck again. Earlier this year in March, this agency of the Read More
Milan Kucerak, president/CEO, West Central
CropLife 100West Central Cooperative And Its New President Are A Ma…
June 29, 2015
To appreciate just how unique West Central Cooperative is in the world of ag retail, an observer need only consider Read More
EquipmentCase IH Launches New Precision Air 5 Series Carts
June 29, 2015
Case IH recently introduced its new Precision Air 5 series air carts, developed to get the most from every plant’s Read More
InsecticidesVestaron Biopesticide Approved In California
June 29, 2015
Vestaron Corporation, a developer of insect control products derived from naturally occurring peptides, today announced that its VST-006330-EP biopesticide has received Read More
InsecticidesValent’s Zeal SC Miticide Receives EPA Approval
June 29, 2015
Valent U.S.A. Corporation announced today that Zeal SC Miticide has been registered by EPA with a new liquid formulation that Read More
Retail FacilitiesUnited Prairie Increased Plant Productivity With Junge …
June 29, 2015
Since 1979, Junge Control continues to provide ag retailers with highly accurate fluid and dry ingredient measuring, mixing and tracking Read More
Winter Wheat
CropLife 100South Dakota Co-op Member Owners Vote No On Unification
June 26, 2015
The Boards of Directors for North Central Farmers Elevator (NCFE) and Wheat Growers (WG) have announced that member-owners have voted Read More
ManagementAsmark Training Center Visit & A Merger No Go
June 25, 2015
CropLife Editor Eric Sfiligoj talks about a visit to the Ford B. West Training Center and the failure of the Read More
Crop InputsWinField: Here’s What We’re Seeing So Far T…
June 25, 2015
One of the most important things you can do throughout the season to help increase yield potential is to ensure Read More
Valent, Commodity Classic 2015
Industry NewsValent Garners FFA Honor
June 23, 2015
Valent U.S.A. Corporation today announced it has been named a 5-star member of the National FFA Foundation. This includes an Read More
Nester Ag intern Brad Nester
Crop InputsOhio NRCS’ New Conservation Practice Standard For Gypsu…
June 22, 2015
Ohio farmers wishing to use gypsum to improve soil quality now have access to technical information and possible financial assistance Read More
Industry NewsWest Central Creates New Executive Team
June 22, 2015
West Central Distribution, LLC officially announced the development of an executive team comprised of Dale Engan, chief executive officer; Michael Read More
MicronutrientsVerdesian Life Sciences Invests In People, Agricultural…
June 22, 2015
In mid-February, the USDA released its new 10-year agriculture projections. While the numbers are new, the theme was consistent. The Read More
Young corn plants
Crop InputsStudy: Crop Rotation Has Positive Impact On Soil Microb…
June 22, 2015
A study authored by Michigan State University (MSU) Department of Plant, Soil and Microbial Sciences assistant professor Lisa Tiemann is Read More