Politics

The Renewable Fuels Association posted a note today deploring the recent lawsuit by the American Petroleum Institute over the EPA decision to increase the maximum blend wall for ethanol in conventional gasoline by 50% from E10 to E15. They claim that it is motivated by “corporate greed.”

Oil companies are in the business of refining oil and selling gasoline to consumers. They aren’t in the business (well, some of them are at this point having bought ethanol plants) of producing and selling ethanol — they don’t make money from it. What would Coca-Cola say if the FDA began mandating that Coca-Cola begin blending increasing percentages of an off-brand cola into their product in order to give the off-brand a guaranteed market share? I suspect they wouldn’t be too happy with this and would fight to be allowed to sell their product as it is, without required additives.

Furthermore, there are still a number of issues the EPA hasn’t clarified with respect to liability for E15. E15 has been approved for newer vehicles, but it isn’t quite clear that it is okay to use in many of the older vehicles still on the road today. It also isn’t clear that E15 can be used in lawn mowers, outboard boating engines, etc. Will the oil refiners be responsible for damages by people who mis-fuel? Will the ethanol industry take responsibility for any problems? (No) Will engine warranties be valid if consumers use a fuel they aren’t supposed to?

Apparently, a portion of the Clean Air Act allows consumers to sue retailers if they put the wrong type of fuel in their vehicle. If stations are now offering E10 and E15 there will be mis-fuelings, and if these lead to damages then there are going to be lawsuits going everywhere. Aside from the obvious loss of profit, it isn’t surprising that the API wants to avoid this liability nightmare.

Are the oil companies displaying corporate greed here? Or is it the ethanol industry who has used government to obtain guaranteed access to a larger and larger portion of the fuel supply (as well as a tax credit on top of it)?

The Guardian reported this weekend on the confusing statistics being employed in Europe’s effort to reduce GHG emissions, “Europe on track for Kyoto targets while emissions from imported goods rise“.

The European Environment Agency reported that Europe is on track to meet agreed-upon emissions reductions of 20% by 2020, having already reduced their emissions by 17% from 1990 levels. A European Think-Tank, Policy Exchange, took a different perspective, noting that during this time emissions from imported goods and services have increased by 40%.

The stringent emissions reductions policy in Europe has caused domestic emissions to be replaced by emissions from foreign imports. If your goal is a global emissions reductions, then by this measure their policy has failed — while raising the price of energy and encouraging manufacturers to relocate abroad.

The European Department for Energy and Climate Change prefers only to look at domestic production, arguing that embedded emissions from imported Chinese produced goods are not the UK’s responsibility, and that “The UK calculates and reports its emissions according to the internationally agreed criteria set out by the UN.” Given China’s clear assertions that Chinese national interests will come first, it seems unlikely that they will be willing to take responsibility for the entirety of emissions from export production.

Walter Russell Mead comments on this topic.