Reduce Ethanol Subsidies to Clean the Environment

President Trump’s new rules for boosting ethanol production represent a big step backwards for the U.S. consumers, both economically and environmentally.

That won’t come as a shock to Beacon readers, since William Shughart and Arthur Wardle provided an excellent overview of ethanol’s many problems shortly after President Trump issued those rules in October. What may be a surprise is how much more damaging ethanol production and consumption are proving to be from new evidence.

For example, because ethanol packs less energy per gallon than gasoline does, vehicle owners can expect to get even lower fuel mileage from the expansion of E15 fuel (a blend of 15% ethanol with 85% gasoline) under the new mandate to include more ethanol in automotive fuels, which would be 4% to 5% less than they would achieve if they only filled their vehicles with 100% gasoline. Today’s vehicle owners already pay a fuel efficiency penalty of 3% to 4% lower gas mileage from the E10 ethanol-gasoline fuel blend mandated under the older ethanol content rules, where the new rules will require even more fill-ups.

Beyond that, to the extent that it diverts corn from food markets to fuel production, corn-based ethanol production also jacks up the price of food—the corn itself, plus everything that eats corn, like beef cattle. One review of multiple studies found that the U.S. government’s corn-based ethanol mandates added 14% to the cost of agricultural commodity prices from 2005 through 2015.

Last summer, the Environmental Protection Agency also found that burning increasing amounts of ethanol has made America’s air dirtier because it generates more ozone pollution, which contributes to smog formation. Worse, growing the additional corn to make more ethanol has also increased agricultural fertilizer runoff pollution in the nation’s rivers and waterways.

That runoff has been linked to the increased incidence of harmful algal blooms, which have been responsible for contaminating drinking water and contributing to red tide events in coastal regions, where fish and other aquatic organisms have been killed off.

There is a solution to these federal government-generated pollution problems: stop forcing corn-based ethanol to be used in the nation’s fuel supplies. There’s even a case study from Brazil, where the city of Sao Paulo found that its air became cleaner after it switched from ethanol-based fuels to gasoline in the years from 2009 to 2011.

At the same time, taking corn out of fuel and putting it back toward food production would make food more affordable while also reducing the amount of agricultural land needed for it, which would be accompanied by less fertilizer use and less of the negative environmental consequences that have resulted from the government’s multiple interventions intended to boost corn-based ethanol production.

Craig Eyermann is a Research Fellow at the Independent Institute.
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