Two bills have recently been introduced that intend to block efforts made to increase U.S. consumption of ethanol.
The first, from Rep. John Sullivan (R-OK), intends to cut funding for EPA’s E15 program. My understanding of the legislation is that “cutting funding” for the program is the equivalent of ending it, as the EPA needs funds to carry out the remainder of the regulatory process (permits, guidelines for fueling stations, E15 warning stickers, etc.).
The second is from Jeff Flake (R-AZ), would end the VEETC and corresponding tariff on foreign ethanol.
Both bills would slightly limit the excessive production of corn ethanol (a good thing), but the bigger problem is the ever-increasing mandate known as the Renewable Fuel Standard. An ideal bill would end the mandate, tax credit, tariff, end the law that allows E-85 vehicles to qualify for mileage standards, and end EPA’s ability to regulate the amount of ethanol in our fuel. Then the ethanol industry couldn’t fairly argue that they’re being denied access to the market. Some energy analysts even believe E85 could exist profitably as a niche industry in the mid-west.
Realistically, in the short run, petroleum would still dominate. However, freeing capital away from politically motivated ends makes it more likely that capital will flow into areas that will actually generate benefits for consumers. It is unclear if that will ever happen with corn ethanol and/or its variants (cellulosic, biodiesel, etc.).
Here is a good piece (and a challenge) by Tim Carney on the ethanol’s industry claim that they’re being unfairly denied access to the fuel market by the EPA. Of course, the ethanol industry is being incredibly disingenuous in its calls for fair competition. They have done this before.