Less Ethanol Is Better Ethanol

Paying at the pump.

Photographer: Joe Raedle/Getty Images

Is the U.S. Environmental Protection Agency in the pocket of Big Oil? Is it siding with "climate deniers"? The claims are as ridiculous as they sound, but they may become more common now that the agency has released its newest "ethanol mandate," which requires less use of the biofuel than Congress and the agricultural lobby called for. 

Ignore the critics: Lowering the ethanol requirement is good for consumers, cars and the planet.

Under the renewable fuel standard released on Monday, the EPA is calling for 18.1 billion gallons of renewables, largely ethanol, to be blended into the nation's gasoline supply next year. This is 4.1 billion less than Congress required in its 2007 Energy Independence and Security Act, which was a well-intentioned effort to reduce the Middle Eastern chokehold on American energy after 9/11. Supporters of the law also claimed it would help keep prices low at the pump and be better for the environment.   

But the oil market and the world have changed in eight years. Increased U.S. production of oil from fracking and other technologies has the country far less dependent on foreign oil than anyone could have foreseen. And cars are more efficient.

In addition, the claims of ethanol's earth-friendliness appear dubious: Reports from the National Academy of Sciences, the United Nations and the Environmental Working Group found that corn ethanol may actually have higher emissions than petroleum-based gasoline. And that doesn't even account for the fossil fuels that go into raising, harvesting and shipping ethanol to market. 

Finally, there is the American taxpayer and consumer to consider: The industry has received tens of billions of dollars in subsidies and tax breaks since the 1980s. Meanwhile, since 40 percent of U.S. corn goes into biofuels, Americans pay an estimated $40 billion a year more at the grocery store.  

This is not to say that moving toward biofuels is a mistake. Other technologies, such as the use of switchgrass and other "cellulosic" materials that humans don't eat, show promise. But for now they cost far more, which is exacerbated by Washington propping up the ethanol industry. 

Ethanol backers are right that the large oil companies, which also get more than their fair share of taxpayer largesse, will benefit from having less biofuel blended into their gasoline. So what? That doesn’t change the argument against ethanol.

The agricultural lobby and its congressional allies -- not to mention presidential candidates stumping for Iowa votes -- are unlikely to take this defeat quietly. The EPA, consumer groups, environmentalists and free-market conservatives need to stand strong, even if that means making common cause with Big Oil.

(Clarifies EPA renewables mandate in third paragraph.)

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.