Bipartisan Support in Congress to Back off on Ethanol

Might the costly US mandate for adding corn ethanol to gasoline finally be ripe for reform? Late last week, Representatives Bob Goodlatte (R-VA) and Jim Costa (D-CA), both members of the House Agriculture Committee, joined with 167 other members from both parties to send a letter to the Environmental Protection Agency (EPA) calling for adjustments to the Renewable Fuel Standard (RFS) mandates. The immediate impetus for the letter is concern that meeting next year’s RFS target would require blending ethanol into gasoline in quantities greater than the 10 percent that has been approved for safe use in many vehicles on the road. The letter also notes that the RFS is contributing to high and volatile corn prices, reduced supplies for livestock producers, and the plowing up of “sensitive wetlands and grasslands.”

The EPA, when it announced the final rule setting the 2013 biofuel mandate levels, indicated that it would likely make adjustments to mandate levels in 2014 because of the safety issues associated with blend levels above 10 percent. But, to date, the EPA has been cautious with the flexibility that the RFS provides. Meanwhile, the wait for a new rule from the agency setting mandate levels each year creates uncertainty. Hopefully the broad support for biofuel policy reform reflected in the letter will lead to a more permanent legislative fix or, better yet, elimination of the mandate. For more on the problems with biofuel policies and potential avenues for reform, check out my recent policy paper.