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Ethanol Mandates and Energy Security

Adam Peshek
January 31, 2012, 3:58pm

In my op-ed yesterday at the Daily Caller, I discussed the misguided policy of cellulosic ethanol mandates, writing:

The question is: Why is the government pouring billions of dollars into the production of nonexistent fuels for “energy independence and security” when the private sector --- through projects like the Keystone XL pipeline --- has the ability to make America energy secure without government handouts?

This is an example of lawmakers who think they can outsmart the private market and overzealous regulators put in charge of enforcing unrealistic laws. The Energy Indepence and Security Act (EISA) set a goal of 250 and 500 million gallons of cellulose to be produced by 2011 and 2012, respectively. So far, no company has been able to produce the fuel commercially. As a result, the EPA decided to reduce the quotas to 6.6 and 8.65 million gallons. Though certainly an improvement (less than 2 percent of the original 2012 quota) oil companies were still fined $6.8 million for not meeting their 2011 target. The fines will increase this year if companies don’t mix the unavailable fuel.

Lawmakers in Congress attempted to give a private company the ability to do this when they passed a measure requiring President Obama to make a decision on the Keystone pipeline. Instead, the President chose to deny the application of the $7 billion project that would transport Canadian crude oil between Alberta, Canada and Port Arthur, Texas via a 1,700-mile, privately constructed pipeline. When it comes to energy security, Canadian Prime Minister Stephen Harper called this project between close trade partners and allies a “no-brainer.”

President Obama called for an “all-of-the-above strategy that develops every available source of American energy” in his State of the Union address last week. His Administration would be wise to allow the development of available, shovel-ready energy projects instead of enforcing sources of American energy that don’t exist.


Adam Peshek is Research Associate


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