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New CRS Report: How Corn Ethanol Mandates Have Hurt Indiana’s Environment and Economy

11/13/2015

Broken Promises, CRS, Final_Page_01

Link to Report

Indianapolis, Indiana – A new report released today by the Center for Regulatory Solutions (CRS), a project of the Small Business and Entrepreneurship Council (SBE Council), reveals the corrosive impact the national corn ethanol mandate has on the economic welfare of Hoosier state residents and their environment. Specifically, the CRS analysis determined that the Renewable Fuel Standard (RFS) could cost Indianans $7.8 billion in higher fuel costs alone over the next ten years. The CRS analysis also found that the RFS could kill roughly 4,100 Indiana jobs every year through 2024, continue to place cost pressures on small businesses, while raising the prices of meat and other consumer goods.

The report also includes the findings of a recent survey that captured the views and attitudes of Indiana voters towards ethanol. The poll finds that more than 40% of Indiana voters are opposed to the RFS and expanded ethanol mandates before they are given any information about the negative environmental and economic impacts of ethanol. Once they are introduced to the scientific data on ethanol’s environmental performance, nearly 9 in 10 respondents said they would be less likely to support the RFS and the corn ethanol mandate knowing that ethanol production and consumption contributed to an increase in greenhouse gases.

The report is the third in a series, following reports on Ohio and New England, detailing the environmental and economic harm caused by ethanol. The report is being released at the same time a series of new television ads spotlighting the failures of the RFS are running across the state during the month of November. The ad, called “Inconvenient Fact,” can be viewed here.

“This report lays bare the failures of Washington’s corn ethanol mandate for Indiana,” said Karen Kerrigan, President of CRS and SBE Council. “We were promised environmental improvements and economic gains from adding corn to our fuel supply. A decade later, those promises have been broken, with corn ethanol causing greater damage to the environment and engines than conventional gasoline, and all of the economic benefits going to the sector producing this crop. This comes at the expense of the rest of the economy. The RFS represents a lose-lose situation for our nation’s small businesses and the environment. When environmentalists like Al Gore begin calling the corn ethanol mandate a mistake, it’s time for Washington to take a new look at why this costly and counter-productive experiment needs to be repealed.”

Some public officials and advocacy organizations that typically disagree over policy have come together to denounce the RFS as a bad deal for Indiana. Some 184 bipartisan members of the U.S. House sent a letter to the Environmental Protection Agency on November 4, urging a revision to the RFS.  Noting the impact that a past drought was having on corn prices, U.S. Reps. Todd Rokita (R) and Todd Young (R) signed a bipartisan letter in 2012, which urged the EPA to lower the RFS mandates and warned that the higher prices would mean “literally billions of dollars in increased costs for livestock and poultry producers, and food manufacturers.”  Such unintended consequences continue to this day.

The Dean of Indiana University’s School of Public and Environmental Affairs, Dr. John D. Graham, testified before Congress, saying: “Unfortunately, the renewable fuels mandate has proven to be quite costly, and has produced some pernicious side effects…The net energy balance of corn-based ethanol is not very good, which reduces its environmental advantages.”

Background

In July 2005, Congress passed and President George Bush signed the bipartisan Energy Policy Act, which established the RFS. The RFS created a set of mandates – known as Renewable Volume Obligations (RVOs) – that require ever-increasing volumes of ethanol to be added to the nation’s fuel supply. In May 2015, EPA again announced new proposed volumes to increase the amount of ethanol used in vehicles, creating new concern amongst a wide variety of bipartisan stakeholders.

Supporters of the ethanol mandate promised a cleaner environment, enhanced energy security, and greater economic support for domestic farmers and rural communities across the country. However, the targets set by Congress, which included a mandate for consumption of cellulosic ethanol, have proved elusive because converting cellulosic feedstock into usable energy is much more challenging than starch-based crops, like corn. Despite this setback, EPA administrator Gina McCarthy – whose agency is responsible for implementing the RFS – is pledging to get the RFS mandate “back on track” and eventually align its targets with congressional mandates.

The CRS report spotlights research from the scientific community which has warned about the environmental impacts of corn ethanol since the mandate’s inception. In fact, these findings led the EPA’s Inspector General to announce on Oct. 15 that it would conduct an investigation into EPA’s calculation of the lifecycle environmental impacts of the RFS. The investigation follows years of media scrutiny of the RFS, which raised serious concerns about the impact of corn-ethanol mandates. In 2013, the Associated Press reported that the rush to plant corn “wiped out millions of acres of conservation land, destroyed habitat and polluted water supplies.” In 2008, TIME magazine concluded that ethanol “increases global warming, destroys forests and inflates food prices.”

Key Findings of the Report

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.