The Washington Times today has an editorial chiding the U.S. Environmental Protection Agency for its decision to proceed with approval and support for higher blends of ethanol (E15) to be sold nationally. There are still a number of complications that seem likely to get in the way of (i.e., the lack of price competitiveness) of widespread use of E15, but recent decisions by the EPA are unfortunately steering the country down that path. However, the editorial makes one comment that doesn’t seem quite right:

This issue highlights the danger of allowing liberal zealots to set public policy. They are so obsessed with micromanaging the lives of others and fulfilling their environmental fantasies that they give no thought whatsoever to the real-world consequences of their schemes.

As a fuel, ethanol is highly corrosive. The E15 gasoline blend reduces gas mileage by 6 percent compared to real gasoline. That adds up to about $150 a year for the average vehicle owner. This expense and the mechanical danger serve absolutely no purpose beyond filling the pockets of wealthy farming giants. Congress needs to repeal the ethanol mandate to protect American pocketbooks – and the car warranties of millions of motorists.

Assuming they are using ‘liberal’ in the liberal versus conservative sense,  ethanol has (both historically and to this day) been supported by both liberals and conservatives alike. Indeed, true market-oriented politicians oppose interventions in our energy markets. However, those politicians are few and far between as politicians from both sides rarely have issue with sacrificing their alleged principles in order to support local constituencies or interest groups.

If you look at current support for ethanol policies, you see a mish-mash of politicians from the Midwest, the Obama Administration, and the generally liberal environmentalists. However, to their credit the environmentalists have mostly abandoned support for corn ethanol while still unfortunately holding out hopes for cellulosic ethanol. Their are numerous conservative politicians who still actively support ethanol: Senator Grassley (R-IA), Mitch Daniels, Republican Presidential comic relief Newt Gingrich, former Republican Presidential candidate and Minnesota Governor Tim Pawlenty, and many more conservative and liberal politicians. President George Bush was a big ethanol supporter.

Ethanol is a costly boondoggle, but it is a bipartisan boondoggle, and turning this issue into yet another who to blame liberal versus conservative fight harms the bipartisan progress that has been made in limiting the use of government to expand ethanol. My colleague Marlo Lewis wrote about conservative support for ethanol earlier this year.

If you want to learn more about the historical bipartisan support for corn ethanol, I would recommend Ken Glozer’s book titled ‘Corn Ethanol: Who Pays? Who Benefits?’

A blog post at the National Corn Grower’s Association, which has since been taken down, was titled: “If the Government Could Mandate Unicorns…” A cached version is here.

When a two year-old throws a temper tantrum because he cannot have a pet unicorn, it can seem confusing, annoying or possibly endearing.  No matter which gut reaction a parent has, they universally understand the need to explain the concept of “nonexistent.” When the Environmental Protection Agency continually demands the impossible, why are they treated any differently?

The issue is simple.  The updated version of the Renewable Fuel Standard mandates usage of 250 million gallons of cellulosic ethanol this year and 500 million gallons by 2012.  As of June 2011, zero gallons of qualifying cellulosic ethanol were produced.  The target is, under current conditions, an impossible demand.

It is a demand based on promises.  Much as parents may tell stories about unicorns and fairies, some players in the ethanol and environmental industries pushed a product which they were not prepared to deliver.  In both scenarios, optimism created a beautiful vision of a world that does not exist.  Once the story was sold, neither party could meet the unrealistic expectation that they had created.

This does not mean there is not hope; the real world provides many wonders.  In reality, corn-based ethanol has provided a sustainable, concrete biofuels option for decades.  Due to the magic that is modern technology, production practices continually improve and create an even more efficient, eco-friendly product.  In the here and now, farmers and the ethanol industry are prepared to meet the demand.

Incredibly strong language from the NCGA. The angle here is prying for corn ethanol to begin replacing cellulosic ethanol’s unattainable mandate, which would add 500 million gallons in 2012 and 1 billion gallons in 2013 (4 and 7.5% of 2010 production, respectively).

Now, the rest of the world thought they were playing for the same team in their quest to free us of the alleged evils of importing energy from foreign countries, and that even the corn guys were aware that corn ethanol was a “stepping stone” to more “sustainable” fuels. Apparently not, as the Corn Grower’s Association, accidentally, admitted that economically viable cellulosic ethanol is a fairy tale, at least in the short term.

On E&E TV. The title mistakenly claims that the NCGA supports ending ethanol subsidies, which they don’t. They are willing to give up a specific tax credit in exchange for different government subsidies or incentives to continue lining their pockets with taxpayer dollars by encouraging ethanol production.

Rick Tolman, the CEO, discusses the reasons the corn industry has come under attack, noting that they have moved into selling a lot of corn for ethanol production. He kind of hides the whole reason for this, which are the corn ethanol production mandates, preferring to vaguely refer to “productivity improvements” which allowed them to also begin exploring additional markets. Unfortunately, markets are blind to everything except prices, so if the mandates had been stringent enough, corn would be converted to ethanol even if we weren’t producing enough additional corn to meet other needs.

He also notes that the oil industry is very upset that the ethanol industry has taken about 10% of their market. Well of course they’re upset, as they should be. There’s no other industry (energy) in America that I can think of which is so heavily reliant on government policies for their existence. Imagine if the government began requiring that 10% of your daily calories come from Starbucks? Isn’t it reasonable that every other food industry (to say nothing of citizens) in America would be justifiably furious? Note that ethanol already has its own E-85 market through flex-fuel vehicles, and its very small, because ethanol is more expensive than gasoline.

Finally, Tolman finishes with the usual line of “they don’t need the tax credits,” while supporting the introduction of new, more expensive subsidies  — for more flex fuel vehicles, federal money for pipelines, the renewable fuel standard, EPA support for higher fuel blends despite the number of problems associated with higher ethanol blends, etc. These are all subsidies. They claim to be willing to “reform” or “give up” the VEETC in the form of replacing it with more wasteful taxpayer dollars funneled into an industry that might never survive on its own (at least at 11 billion plus gallons per year). And they keep getting away with claiming that they don’t want subsidies anymore, while deflecting blame toward the oil industry.

If ethanol was indeed amazing, it wouldn’t have to go through the oil industry. The oil industry would be begging for the 15% gasoline blend in E-85. Gasoline stations would install E-85 pumps on their own accord. This isn’t happening, even with record high gas prices, because ethanol isn’t an efficient fuel, and hasn’t been for over 100 years.