Magazine article National Defense

Renewable Fuels

Magazine article National Defense

Renewable Fuels

Article excerpt

Mileage mandates and biofuels aren't silver bullets


The United States got on the right path right after the Arab oil embargo shocks of the 1970s by focusing on higher mileage requirements for cars and trucks. But the drop in oil prices in the 1980s drove the nation off course. In addition, Detroit's lobbying of Congress to get personal vehicles disguised as trucks - which were exempted from the mileage rules for cars - opened the door to the golden age of the sports utility vehicle and as a result the mileage targets became an empty promise. Consumption of gasoline just steadily grew.

Even if Congress had not created the SUV loophole, we would have eventually seen consumption of gasoline continue to increase despite mileage targets, but perhaps not as fast. One of the perverse and unintended consequences of "energy efficiency" as first conceptualized and implemented in the 1970s and 1980s was that, over time, instead of Americans driving the same distance in the same sized cars for less, they would eventually spend the money to drive farther in larger vehicles as the cost of operating those vehicles dropped.

A similar phenomenon also took place in the home building sector - instead of Americans living in the same amount of space with the same amount of heating, cooling and electrical appliances, many spent the same money or more to live in bigger houses that sucked down even more current to power more heating, cooling and appliances.

Proponents of energy efficiency are painfully aware of this, but they do not like to alert their authences to such perverse consequences. Yet it's true. This doesn't mean we shouldn't demand energy efficiency of our vehicles, simply that if all we do is to improve that efficiency incrementally and slowly, we won't solve the challenge of making a big dent in gasoline consumption because after a while we'll be consuming a lot more gasoline than before.

Putting aside the fancy and misleading "fleet" accounting meant to meet Department of Transportation regulations and satisfy the laws on the books, many vehicle models today get less mileage than in the 1970s. A law passed in 2007 finally strengthened the CAFE (corporate average fuel economy) standards but the U.S. automotive industry is years behind those of Japan and Europe.

The nation has wasted a lot of time not just with mileage requirements but also with funding inappropriate alternative fuels.

Washington tried to solve two problems at once by proclaiming that corn-based ethanol could serve as a realistic substitute to regular gaso- line that is refined from crude. Since the Carter years, producers of ethanol-blended gasoline have received a subsidy or tax credit. This incentive, known as the Blender's Tax Credit, is currently valued at $0.51 per gallon of pure ethanol that is used in blending.

Ethanol imported into the United States is subject to two customs duties: an ad valorem tariff rate of 2.5 percent and a secondary tariff of $0.54 per gallon. The Ethanol Import Tariff of 1980 imposed the $0.54 per gallon tariff on imported ethanol. The rationale behind the tariff on imported ethanol was to presumably offset the Blender's Tax Credit incentive for ethanol-blended gasoline. Unless imports enter the United States duty-free, the tariff effectively negates the incentive for those imports.

It gets worse. The Energy Policy Act of 2005 established the Renewable Fuels Standard (RFS) which directs that gasoline sold in the United States contain specified minimum volumes of renewable fuel. The Energy Independence and Security Act of 2007 sets a new RFS that starts at 9 billion gallons of renewable fuel in 2008 and rises to 36 billion gallons by 2022. Of the latter total, 21 billion gallons of renewable fuel in U.S. transportation fuel is required to be obtained from advanced biofuels. The term "advanced biofuel" means renewable fuel, other than ethanol derived from corn. …

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