First Things First: Capping Corn-Based Biofuel Production

When Congress dramatically expanded the Renewable Fuel Standard in 2007, supporters of the revised RFS—which is supposed to push 36 billion gallons of biofuel into the US fuel market by 2022—touted the program as a solution to our overdependence on foreign oil, a cure for flagging rural economies, and a tool for reducing greenhouse gas emissions. It has become clear over the past five years, though, that the RFS is better at generating problems than it is at delivering solutions. The program’s main achievement to date—shepherding an enormous scale-up in corn ethanol consumption—has pushed up food prices in the United States and around the world and increased GHG emissions, air pollution, water pollution, and habitat destruction.

Some of the more serious problems associated with the RFS can be addressed by EPA, but so far the Agency has passed on a string of opportunities to take corrective action.

For example:

• EPA has refused to reexamine its regulation of corn ethanol, even after the Clean Air Task Force, the National Research Council, and others pointed out that EPA’s own analysis shows that the fuel does not meet the minimum emissions reduction requirement established by Congress in 2007.
• EPA denied a state petition to partially waive the corn ethanol mandate in 2008, announced an impossible set of criteria that it would use to review subsequent petitions, and then relied on those criteria to deny another set of waiver petitions that were submitted last year—even though the petitions were submitted by nine different states in the midst of the worst drought in over fifty years, and had the backing of 34 senators and more than 150 members of the House of Representatives.
• EPA has dealt with the shortfall in cellulosic biofuel production by allowing so-called “advanced biofuels”—mainly sugarcane ethanol from Brazil and soy biodiesel—to fill out the mandate. The Agency has proposed to follow this approach going forward, even though doing so is likely to drive up GHG emissions by increasing the production of corn ethanol, palm oil, or both. If the United States significantly increases the amount of sugarcane ethanol it imports from Brazil in order to backfill for the cellulosic biofuel shortfall, Brazil—which has its own biofuel consumption mandate—will increase its importation of corn ethanol produced in the United States. Similarly, if more soybean oil is diverted from food markets to the fuel market (where it is converted to biodiesel), the unmet demand for vegetable oil will cause production of palm oil—the lowest cost vegetable on the global market—to rise. Whether EPA’s proposed approach drives up production of corn ethanol or palm oil, the result will be higher food prices and an increase in GHG emissions.
• EPA has also proposed to allow butanol made from corn starch to qualify as an “advanced biofuel” under the RFS, potentially opening the door to a significant increase in the amount of corn that can be used to make biofuels. Corn ethanol already has a hammerlock on the RFS compliance credits available to conventional biofuels; allowing biofuels made from corn kernels to qualify for “advanced” compliance credits as well could easily exacerbate the competition between food markets and fuel markets, expand agricultural land into key wildlife habitats, and set off a new round of land use change-related carbon dioxide emissions.

Add in the problems connected to the blend wall, the escalating price of Renewable Identification Number (RIN) credits, and episodes of RIN fraud, and it comes as no surprise that Congress is thinking about how to step in. Some of the changes under discussion are misguided—like letting natural gas qualify as a “renewable fuel”—but others would improve the RFS’s environmental impact.

The most important of these changes would prevent new increases in the amount of corn that can be used to produce RFS-compliant biofuels. The reform bill sponsored by Rep. Bob Goodlatte, for example, would prohibit EPA from allowing sugarcane ethanol and other “advanced biofuels” to make-up for missing cellulosic biofuels, which in turn would constrain new Brazilian demand for US-grown corn ethanol. Other bills under consideration would prevent biofuels made from corn starch from qualifying for RFS credits, regardless of whether the corn kernels are converted into ethanol or butanol.

As mentioned earlier, however, EPA can lessen some of Congress’s appetite for these reforms by taking steps to cap the production of corn-based biofuel. The agency can reverse course on its proposed decision to allow sugarcane ethanol to backfill the cellulosic biofuel shortfall (which in turn would reduce indirect demand for more corn ethanol). And it can keep butanol made from corn starch out of the RFS, at least until it develops regulatory methods for ensuring that butanol production does not increase the total amount of corn used to make biofuels.