The New York Department of Agriculture and Markets has proposed a new rule that would allow gasoline blended with up to 15 percent ethanol, commonly called E15, for sale to cars and trucks manufactured after 2001. The Empire State currently only allows the sale of E10, which is gasoline blended with 10 percent ethanol. This new mandate would create demand for an extra 825 million gallons of ethanol, which would amount to 295 million bushels of corn.
The Center for Regulatory Solutions (CRS) has produced a series of reports on the deleterious effects of the corn ethanol mandate, also known as the Renewable Fuel Standard (RFS), on state economies and environments.
CRS reports the RFS has led to $5 billion in unnecessarily high fuel costs for residents of Illinois, a state with a population size similar to that of New York, through 2014. If the mandate continues unchanged, CRS projects it will cost Illinois residents another $17 billion through 2024. CRS notes these higher fuel costs will depress labor income by roughly $7 billion by 2024, spiking more than 7,000 potential new jobs per year and causing more than $12.1 billion in lost gross domestic product (GDP).
This same pattern holds true for New York’s neighbors in New England. RFS caused New Englanders over $890 million in higher fuel costs in 2014 alone. The cost across all six New England states from 2005 to 2014 was over $5.6 billion. “The RFS,” the report states, “will reduce labor income by $7.3 billion, and labor demand by 141,000 job-years, from 2005 to 2024. That’s the equivalent of 7,050 lost jobs per year, each and every year over a 20-year time period.”
A part of the Energy Policy Act of 2005, which was expanded by the Energy Independence and Security Act of 2007 and is administered by the Environmental Protection Agency (EPA), RFS requires 36 billion gallons of renewable-fuel sources, such as ethanol, be blended into gasoline and diesel fuel by 2022. Proponents of RFS say its implementation would reduce carbon-dioxide emissions and American dependence on foreign oil.
The latter reason for RFS has been negated by the boom in oil and natural gas production caused by hydraulic fracturing and horizontal drilling, and the former was never reasonable to begin with. Biofuel production requires a great deal of land, disrupting the carbon-storing potential of the soil and at least partly offsetting emissions reductions that may have been achieved by substituting ethanol for regular gasoline. Since implementation of RFS in 2005, Illinois, for example, has seen more than 22,000 tons of soil erosion as a direct result of increased corn production. A report published in October 2016 in Climatic Change came to the conclusion U.S. biofuel use has actually resulted in a net increase in carbon-dioxide emissions.
In November 2015, the Obama administration and EPA released a reduction in volume mandates for 2016, lowering them from 22.25 billion gallons to 18.11 billion gallons. This is well below what RFS required in 2005 and is a welcome first step in the right direction, but RFS should be completely repealed.
Ethanol and other biofuels do not produce environmental or economic benefits that justify their subsidization, and it is wrong to assume New York State will be immune to the same forces that raised fuel costs and reduced labor income in its New England neighbors and other states. Giving the green light to E15 fuels is nothing more than a well-intentioned mistake.
As The Heartland Institute has noted before, “The RFS imposes higher costs on consumers and small businesses, kills jobs, and harms both the economy and the environment. We should repeal the RFS entirely. Let consumers and the marketplace determine how much ethanol should be blended with fuel.”
The following documents provide additional information about ethanol and the renewable fuel standard.
Ten Principles of Energy Policy
https://heartland.org/publications-resources/publications/ten-principles-of-energy-policy Heartland Institute President Joseph Bast outlines the ten most important principles for policymakers confronting energy issues, providing guidance to deal with ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography.
The Ethanol Mandate: Don’t Mend It, End It
https://heartland.org/publications-resources/publications/the-ethanol-mandate-dont-mend-it-end-it?source=policybot
The Heritage Foundation’s Nicolas Loris argues the only true reform of the Renewable Fuel Standard is to eliminate it. Loris urges Congress to repeal the costly and unnecessary mandate.
Carbon Balance Effects of U.S. Biofuel Production and Use
https://heartland.org/publications-resources/publications/carbon-balance-effects-of-us-biofuel-production-and-use
The multi-billion-dollar, heavily subsidized and mandated use of biofuels in the United States has been built on the false assumption biofuel use will reduce the overall amount of greenhouse-gas emissions from transportation. This study from Climatic Change shows biofuels – created from crops such as corn, sugar beets and soybeans – cause more emissions of carbon dioxide than gasoline.
A High Price to Pay: The Hidden Costs of Corn-Ethanol Mandates on New England
https://heartland.org/publications-resources/publications/a-high-price-to-pay-the-hidden-costs-of-corn-ethanol-mandates-on-new-england?source=policybot
This Center for Regulatory Solutions report spotlights research from the scientific community that has warned about the environmental impacts of corn ethanol since the mandate’s inception. This report, which is one out of a series of five studies, focuses on the ethanol mandate’s impact on the New England states.
Fields of Deception: How the Corn Ethanol Mandate Harmed the Prairie State
https://heartland.org/publications-resources/publications/fields-of-deception-how-the-corn-ethanol-mandate-harmed-the-prairie-state?source=policybot
This Center for Regulatory Solutions report spotlights research from the scientific community that has warned about the environmental impacts of corn ethanol since the mandate’s inception. This report, which is one out of a series of five studies, focuses on the ethanol mandate’s impact on Illinois.
The Corn Sellout: How National Politics and Ethanol Mandates Are Hurting California’s Economy
https://heartland.org/publications-resources/publications/the-corn-sellout-how-national-politics-and-ethanol-mandates-are-hurting-californias-economy?source=policybot
This Center for Regulatory Solutions report spotlights research from the scientific community that has warned about the environmental impacts of corn ethanol since the mandate’s inception. This report, which is one out of a series of five studies, focuses on the ethanol mandate’s impact on California.
The Lost Decade: How Corn Ethanol Mandates Have Hurt Ohio’s Environment and Economy
https://heartland.org/publications-resources/publications/the-lost-decade-how-corn-ethanol-mandates-have-hurt-ohios-environment-and-economy?source=policybot
This Center for Regulatory Solutions report spotlights research from the scientific community that has warned about the environmental impacts of corn ethanol since the mandate’s inception. This report, which is one out of a series of five studies, focuses on the ethanol mandate’s impact on Ohio.
Promises Broken: How the Corn Ethanol Mandate Hurts Indiana’s Economy and Environment
https://heartland.org/publications-resources/publications/promises-broken-how-the-corn-ethanol-mandate-hurts-indianas-economy-and-environment?source=policybot
This Center for Regulatory Solutions report spotlights research from the scientific community that has warned about the environmental impacts of corn ethanol since the mandate’s inception. This report, which is one out of a series of five studies, focuses on the ethanol mandate’s impact on Indiana.
Biofuel’s Carbon Balance: Doubts, Certainties and Implications
https://heartland.org/publications-resources/publications/biofuels-carbon-balance-doubts-certainties-and-implications?source=policybot
In this September 2013 paper published in the peer-reviewed scientific journal Climatic Change, John DeCicco questions the carbon dioxide balance of biofuel use. He finds using plants to make biofuels emits just as much CO2as is saved by replacing petroleum with biofuels, undermining biofuels as a tool for effective climate policy.
Coalition Letter Calls for Repeal of Renewable Fuel Mandates
https://heartland.org/news-opinion/news/coalition-letter-calls-for-repeal-of-renewable-fuel-mandates
This letter to Congress from a coalition of 21 public policy organizations outlines the economic and environmental damage caused by federal renewable fuel mandates. The coalition members argue the only way to repair the damage is to repeal the mandate.
National Academy of Sciences: Renewable Fuel Standard Goals Unlikely To Be Met
http://www.nap.edu/openbook.php?record_id=13105&page=4
In a report evaluating the economic and environmental effects of the renewable fuel standard, the National Academy of Sciences finds RFS “may be an ineffective policy for reducing global [greenhouse gas] emissions” because land conversion for biofuel production involves vegetation removal, which disrupts future potential to store carbon in soil or biomass, thus offsetting any greenhouse gas benefits gained by displacing traditional fuels.
Ethanol Production and Gasoline Prices: A Spurious Correlation
https://heartland.org/publications-resources/publications/ethanol-production-and-gasoline-prices-a-spurious-correlation
Claims from the ethanol industry that ethanol blending reduces gasoline prices are contradicted by economics professors at the Massachusetts Institute of Technology. They conclude ethanol has no such effect. Moreover, it contains 33 percent less energy than gasoline, so engines need more of it to power a vehicle the same distance.
Challenges to the Transportation, Sale, and Use of Intermediate Ethanol Blends
http://www.gao.gov/products/GAO-11-513
The U.S. Government Accountability Office reports a federally funded study found the effect of ethanol-blended gasoline was to “reduce a vehicle’s fuel economy (i.e., fewer miles per gallon) and may cause older automobiles to experience higher emissions of some pollutants and higher catalyst temperatures.”
Energy Regulation in the States: A Wake-up Call
https://heartland.org/publications-resources/publications/energy-regulation-in-the-states-a-wake-up-call
The Institute for Energy Research lists state-by-state data on several energy regulations, including which states require gasoline to be mixed with renewable fuels.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the website of Environment & Climate News at https://heartland.org/publications-resources/newsletters/environment-climate-news, The Heartland Institute’s website at https://heartland.org, and PolicyBot, Heartland’s free online research database at https://heartland.org/policybot/index.html.
The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state; or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Logan Elizabeth Pike, Heartland’s government relations manager, at [email protected] or 312/377-4000.
Tim Benson joined The Heartland Institute in September 2015 as a policy analyst in the Government Relations Department.
