Mandating the impossible: The EPA and cellulosic ethanol

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January 3, 2012 | Posted by Ken Cohen

Here’s a New Year’s resolution worth making: Let’s not mandate the impossible.

Unfortunately, the Environmental Protection Agency did just that last week, setting new quotas for 2012 that will require the nation’s refiners to add 8.65 million gallons of cellulosic ethanol to America’s fuel supplies.

The only catch: America doesn’t have the cellulosic ethanol to meet that standard.

Cellulosic ethanol is intended to be an advanced alternative to corn-based ethanol. By deriving it from inedible plant matter such as switchgrass, wood chips, and wheat straw, the hope is that cellulosic ethanol could supplement our transportation fuels in a way that is more efficient and has fewer harmful impacts on the environment and food prices than corn-based ethanol.
In practical terms, cellulosic ethanol still faces significant challenges. The scientific community and American industry have yet to find a way to make the fuel cost competitive.

As the National Research Council stated last month in a lengthy study on biofuels, “Currently, no commercially viable biorefineries exist for converting cellulosic biomass to fuel.”

This technological fact hasn’t stopped the EPA from setting impossible standards in the past. It mandated cellulosic ethanol quotas in 2010 and 2011, which failed abysmally, according to the EPA’s own data. (See chart.) In other words, the EPA’s decision makers should know better by now – and choose a new course of action.

Congress gave the EPA discretionary power to set what is called the Renewable Fuel Standard to take into account the state of investment, innovation, and capabilities of the biofuels sector. When lawmakers passed the Energy Independence and Security Act in 2007, they set lofty goals that many throughout the broader economy knew were impossible to meet.

Congress set a goal of producing 36 billion gallons of renewable fuels by the year 2022. Of that 36 billion gallons, nearly half (16 billion gallons) was supposed to come from yet-to-be-discovered breakthroughs in non-corn based ethanol.

That’s why the EPA was given flexibility. So, who will be paying for the impossible-to-reach EPA standards in 2012? The American economy and the American consumer.

Under the current law, refiners (and, indirectly, consumers) have to pay a fee for failing to blend cellulosic ethanol into existing fuel supplies. Meanwhile, because there is no alternative but to pay the fee, it has quietly turned into a revenue-raising device that contributes nothing to energy, growth, or jobs.

What should EPA and Washington do? It’s easy. Stop picking winners and losers in the marketplace – and let industry compete and do what we do best, which is to invest and innovate to bring real and affordable energy to consumers in a safe, secure, and environmentally responsible way.

As the president of the National Petrochemical & Refiners Association said, “Instead of imposing an unreasonable biofuels mandate, which would raise energy costs and impact fuel supplies, government should allow consumer choice and the free market to determine the mix of energy sources to best meet our nation’s needs.”

Rather than mandating the impossible, lawmakers and regulators should instead resolve to let markets work.

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Posted on January 3, 2012, in Energy, Tax Payer's Dime and tagged , , , , , , , , . Bookmark the permalink. 1 Comment.

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