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Introduction

Ethanol's Broken Promise: Introduction

May 29, 2014

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Transportation accounts for 28 percent of greenhouse gas emissions in the United States.2 In an effort to reduce these emissions, Congress passed a law in 2005 requiring oil companies to blend socalled renewable fuels – produced by converting biological material (biomass) into ethanol, biodiesel or other liquid fuels – into vehicle fuels. Two years later, the Energy Independence and Security Act (EISA) dramatically increased the amount of biofuels required to be blended into gasoline. This mandate, formally known as the Renewable Fuel Standard (RFS), was intended to reduce U.S. dependence on foreign oil imports and reduce greenhouse gas emissions.

The Renewable Fuel Standard requires that annual biofuel use increase every year, from 9 billion gallons in 2008 to 36 billion gallons in 2022. Of the 36 billion gallons of biofuel required in 2022, up to 15 billion gallons can be produced from corn. The remaining 21 billion gallons (dubbed “advanced biofuels”) would have to come from a biomass-based feedstock that is not corn. This requirement was intended to help get advanced fuels off the ground, but commercial production has fallen short of the mandated level every year since the law took effect in 2009. In reality, the law has produced a flood of corn ethanol and only a trickle of the advanced biofuels that were the goal of the act.

Every year, as required by the Renewable Fuel Standard, the EPA sets the mandate for the annual volumes of biofuels to be blended into gasoline, called the statutory Renewable Volume Obligations (or RVOs). The EPA sets the RVOs every year so that ethanol plants know how much to produce and oil refineries know how many gallons to blend into gasoline. In November 2013, EPA proposed to significantly reduce the 2014 required volumes of biofuels to be blended into gasoline.3 In its proposal, EPA reduced the RVOs for advanced and cellulosic, and, for the first time since the Renewable Fuel Standard was implemented, also proposed to reduce the mandated volume of corn ethanol. Reducing the corn ethanol mandate would reduce the demand for corn, thereby reducing the incentives for converting land to corn production.