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Ahead of EPA Action, New Report Details the Federal Corn Ethanol Mandate’s Devastating Harm to Illinois’ Economy, Environment

11/20/2015

Fields of Deception, CRS, 11.19.15_Page_01

Link to Report

WASHINGTON, D.C. – With less than two weeks left before the Obama administration’s Environmental Protection Agency (EPA) announces its corn ethanol volume mandates for 2014, 2015, and 2016, the Center for Regulatory Solutions (CRS), a project of the Small Business and Entrepreneurship Council (SBE Council), issued a new report detailing the devastating impact the federal ethanol mandate has had on the president’s home state.

The report, “Fields of Deception: How the Corn Ethanol Mandate Harmed the Prairie State,” outlines the significantly negative consequences EPA’s decision could have for Illinois and the nation, and highlights the widespread opposition within the state to the failed ethanol mandate.

“Washington’s corn ethanol mandate has been picking winners and losers for a decade,” said CRS president Karen Kerrigan. “Contrary to conventional wisdom, our report shows that Illinois, an early supporter of ethanol, has lost thousands of jobs and incurred enormous economic costs as a result of the ethanol mandate. In fact, the ‘ethanol tax’ will cost Illinois consumers and small businesses nearly $22 billion in higher fuel costs alone.”

Indeed, a diverse coalition of environmental groups, editorial boards, and academics are increasingly speaking out against the ethanol mandate, also known as the Renewable Fuel Standard (RFS). “[Ethanol] should be quietly taken out in the back and given the boot,” writes the Chicago Sun-Times’s editorial board, later adding: “Ethanol, it is easy to argue, is a bust.” “It’s quite reasonable to say that corn ethanol has a number of very serious environmental consequences,” says Evan DeLucia, Plant Biology Professor and Director of the Institute for Sustainability, Energy and Environment at the University of Illinois at Urbana-Champaign.

The RFS has already cost the people of Illinois roughly $5 billion in higher fuel costs between 2005 and 2014, with another nearly $17 billion to come through 2024 if the mandate remains intact, according to the CRS analysis. The ripple effects of higher fuel costs will depress labor income by almost $7 billion over 20 years, and depress labor demand by more than 7,000 jobs annually.

Additionally, Illinois’ dairy and poultry farmers face hundreds of millions of dollars in higher costs, as rising demand for corn ethanol has increased the cost of corn-based animal feed. Overall, the report estimates the RFS will result in more than $12 billion in lost Illinois GDP growth by 2024.

“While a small segment of Illinois’ farmers have benefitted from the RFS,” added Kerrigan, “it has come at a great cost to livestock farmers and the rest of the state’s economy. It’s time for Washington to end this costly and harmful mandate.”

The CRS report also analyzes the environmental impacts of RFS-mandated corn ethanol production and consumption in Illinois, taking into consideration ethanol’s lifecycle emissions.

According to the analysis, ethanol has generated nearly 4.1 million metric tons of carbon dioxide-equivalent emissions since 2005 – roughly the same as putting over 855,000 automobiles on the road for a single year – and more than 80,000 tons of additional smog-forming emissions. These higher emissions will make environmental regulations out of Washington even harder to meet.

What’s more, Illinois’ ethanol industry has used more than 12.1 billion gallons of water per year since 2005, roughly the equivalent of 126,500 households’ annual water consumption. The mandate has also caused more than 22,000 tons of soil erosion and required an additional 306 million tons of fertilizer and 335 million tons of chemicals to be used on corn fields, contributing to ground and surface and pollution.

The CRS report for Illinois is the fifth in a series, spanning California, the six New England states, and the corn-producing Midwestern states of Ohio and Indiana. The reports examine the economic and environmental toll of the federal corn ethanol mandate to inform the RFS debate at the local, state, and federal level.

KEY REPORT FINDINGS

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About CRS

The Center for Regulatory Solutions is a project of the Small Business and Entrepreneurship Council, a 501c(4) advocacy, research, education and networking organization dedicated to protecting small business and promoting entrepreneurship. For twenty-three years, SBE Council has worked to educate elected officials, policymakers, business leaders and the public about policies that enable business start-up and growth.