Biofuels don't lower gas price or emissions, report finds

A U.S. federal program requiring the use of corn-based ethanol and biodiesel in gasoline supplies hasn’t lowered pump prices or significantly reduced greenhouse gas emissions, according to the U.S. Government Accountability Office.

Gasoline prices outside of the corn-rich Midwest likely rose by a few pennies a gallon at the pump because of the Renewable Fuel Standard, while falling slightly in areas with ethanol plants, the GAO said in a report posted online Monday. The pump price effects likely diminished over time. Refiners benefited from installing equipment for the fuel-blending requirement “that, over time, reduced refining costs for gasoline,” according to the report.

In addition, the GAO found that “most of the experts we interviewed generally agreed that to date the RFS has likely had a limited effect, if any, on greenhouse gas emissions.” That’s due to the continued reliance on corn-based ethanol, instead of more advanced cellulosic biofuels that use agricultural waste but haven’t shown a great deal of commercial viability.

The report was commissioned at the request of U.S. Senator James Lankford, an Oklahoma Republican and a cosponsor of bills to reduce or eliminate the mandate.

Contentious Law

The 2005 law that required annually increasing use of biofuels has been contentious, not only among agricultural and oil-refining states, but also for government agencies. Last year, the U.S. Environmental Protection Agency published a report saying corn-based ethanol and soybean-based biodiesel is hurting water quality, and the program may be boosting the number of acres being planted for biofuels.

In April, the U.S. Department of Agriculture released a study that found corn-based ethanol’s greenhouse gas emissions were 39% lower than gasoline over the entire life cycle, from the initial production of raw materials to its processing and eventual combustion in vehicles.

USDA disagreed with the GAO report’s conclusion that the program has had limited effects on reducing emissions. It also told GAO that its “conclusion that the RFS likely had modest impacts on gasoline prices should be augmented by a discussion of the volatility of gasoline prices,” according to the report.

The Renewable Fuels Association, an industry trade group, criticized the findings of the GAO report, citing USDA’s study and that it also stands “by research that indicates savings at the fuel pump.”

© 2019 Bloomberg L.P.

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