Environmentalism

The Dumbest Federal Policy You’ll Read About Today

It benefits special interests, hurts consumers, and harms the planet. What could be worse?

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If you are like most people, you probably spend a lot of time wondering, "What is the absolutely worst environmental policy on the planet?" And if you are like most people, you probably think it is America's ethanol policy. So Virginia's recent decision to subsidize what will be the largest ethanol plant on the East Coast might strike you as doubling down on the dubious.

Don't be too hasty. We have some competition.

True, America's policy of blending corn-based ethanol into gasoline is unbelievably awful. For decades, Congress lavished billions of dollars on fuel producers to encourage the practice. As a result, almost half the U.S. corn crop gets pumped into gasoline tanks. Owing in no small part to that, corn prices more than doubled from 2006 to 2011. This raised the price of food both for people and for animals that people eat, such as farm-raised pigs. As a result, notes Bloomberg Businessweek, "ethanol mandates have acted as an efficient way to funnel cash from the world's disadvantaged to its agro industry conglomerates."

So the mandate is bad for poor people. But at least it raises gasoline prices! For one thing, ethanol costs more to produce than gasoline. And when Washington replaced ethanol subsidies with a renewable-fuel standard, it set increasingly high—and increasingly unrealistic—targets for the amount of ethanol to be blended with gasoline. Since there is not enough ethanol to go around, some gasoline producers have to buy ethanol credits known as renewable identification numbers (RINs). The trading of RINs has driven their price sharply higher, which has raised prices at the pump.

(Bonus point: Federal rules are driving refiners up against a "blend wall"—the point at which the ethanol content in gasoline exceeds 10 percent. Using more than a 10 percent ethanol blend voids many car warranties.)

But ethanol is helping to stave off global warming, right? Wrong. Corn needs farming, and farming needs fertilizers and tractors and hauling and so on. In some cases ethanol production requires more energy than the fuel delivers to your engine. Analyses differ, but by some estimates ethanol actually raises carbon-dioxide emissions from the tailpipe 12 percent over non-ethanol blends. (Even the federal government—which imposes the mandate—concedes "the ethanol program has little effect on the environment.")

Ethanol is therefore one of the few subjects on which all corners of the ideological map agree. U.S. ethanol mandates are "catastrophically idiotic" (Mother Jones); "costly and unnecessary" (the Heritage Foundation); and "blatant corporate welfare" (the Cato Institute). Aside from that, they're great.

So naturally, last week Virginia Gov. Terry McAuliffe boasted that he had played "a significant role" in using state subsidies to revive a defunct ethanol plant in Hopewell, south of Richmond. Osage Bio Energy built the $200 million facility a few years ago in the hope of raking in federal incentives for turning barley into gas. That didn't pan out, and the plant never even lit the boilers. Last year Vireol, a British firm, bought the plant, intending to disassemble it and ship it overseas.

But thanks to Riley Ingram, Hopewell's representative in Virginia's House of Delegates, the company is going to stay. He sponsored legislation ensuring that for the next three years it will get up to $1.5 million in state support to produce about 170 million gallons of ethanol. The company also will get a $250,000 state development grant, matching tax breaks from Hopewell, employee training incentives, and Enterprise Zone incentives. This is supposed to create jobs—if you don't count the jobs that would otherwise be created if not for the economic inefficiency of all that government meddling.

Upshot? Virginia taxpayers will shell out millions to help make food and gasoline more expensive while making global warming worse. 'Twas a famous victory.

It's hard to find a policy that makes less sense—but London's Daily Mail has done so. According to a story it ran in March, vast swaths of North Carolina forest are being clear-cut to make wood pellets for use in Britain, which is supposed to almost triple its renewable-energy use in the next six years. Subjects of the British crown are paying hefty subsidies to underwrite the cost of shipping a million metric tons of wood pellets a year 3,800 miles across the ocean—the ships leave from Virginia ports—so they can be burned at the Drax power station in Yorkshire.

If you think that sounds incredibly inefficient, you're right. It actually generates 20 percent more carbon dioxide than burning coal would—and twice as much as burning natural gas would. Meanwhile, the trees being mowed down to feed the insatiable Drax maw will take about a century to regrow. But since they do regrow, that technically makes wood pellets a "renewable" resource. (By that logic, so is coal.)

For this, British taxpayers shelled out more than 62 million pounds—about $100 million—in green-energy subsidies last year. Britain's government also is going to make them pay 105 pounds ($176) per megawatt-hour for this "green" energy, which is seven times what they'll pay for nuclear energy, which really does help reduce global warming.

Nigel Burdett, Drax's environmental manager, explains why this is happening: "Our whole business case is built on [the] subsidy, like the rest of the renewable energy industry," he told the Daily Mail. "We develop our business plan in light of what the government wants—not what might be nice."

So back to the question at the start of this column: Which policy is worse? To answer that one, the judges might need to go to the videotape.

This article originally appeared at the Richmond Times-Dispatch.

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41 responses to “The Dumbest Federal Policy You’ll Read About Today

  1. Nigel Burdett, Drax’s environmental manager, explains why this is happening: “Our whole business case is built on [the] subsidy, like the rest of the renewable energy industry,”

    Like the rest of the renewable energy industry. That says it all.

    1. Hooray for accidental honesty!

      1. Why do you think it’s accidental? Free shit from the government is the usual plan.

    2. You beat me to it, John.

      Anyhoo: “We develop our business plan in light of what the government wants?not what might be nice.”

      What’s nice about the US is that We the People *are* the government!

    3. But John, all they need is a little helping hand to get them on their feet. After that, I’m sure they’ll be happy to give up the subsidies and compete with fossil fuels on a level playing field.

    4. But John, all they need is a little helping hand to get them on their feet. After that, I’m sure they’ll be happy to give up the subsidies and compete with fossil fuels on a level playing field.

  2. But…intentions.

  3. So, if the GOP is the Stupid Party is Britain the Stupid Island?

    IFH, you should weigh in on this.

    1. And Earth is the stupid planet.

      1. If there are aliens they probably consider Earth to be a bad neighborhood and avoid going there, like most people do in Detroit. It’s no wonder we never see them around.

  4. It really is amazing how much damage environmentalists have done to the environment. Apparently, only intentions matter.

    1. “Apparently, only intentions matter.”

      Anyone who makes appeals regarding ‘mother earth’ has stepped beyond science into religion; that is a religious concept.
      So expecting them to respond to reason means disappoint.

    2. Their intentions are not what they say they are. They don’t give a flying shit about ‘the environment’.

    3. As Grandmother used to say “The road to Hell is paved with good intentions.”

  5. Home run, Hinkle!! If only this article could be read by every person in the country.

    1. …”If only this article could be read by every person in the country.”

      Wouldn’t matter.
      Won’t get the IA congress critters tossed and the CA congress critters need their votes for the choo-choo, and the NY…..

    2. Oh my ass Big T….the title of the article is:

      The Dumbest Federal Policy You’ll Read About Today

      When a really skilled judge of ongoing federal stupidity would have written:

      “The Dumbest Federal Policy You’ll Read About Today….as of this moment.

  6. liberals are fucking retarded (and yes, this is all being driven by liberal ideology. Bill Maher on his show once asked why we can’t do sugarcane ethanol like Brazil does. Gee, I dunno? Maybe we have almost zero areas of TROPICAL CLIMATE. It takes determined stupidity to “not know” something like that.
    The sugarcane works only because the plant just naturally comes with that much energy. Even if you dry the liquid completely to make sugar as in traditional sugar refining, there’s still excess energy in the bagasse (leftover pressed solids) that can be burned to run the factory AND provide extra energy to sell; some of the first power plants were sugar refineries. Compare that to ethanol production, where you only want to evaporate SOME of the water to start the fermentation process. And then distillation of alcohol, since alcohol has a low boiling point, isn’t very energy intensive. And of course sugarcane juice is naturally already all sugar, no starch, so no conversion process is necessary for fermentation.

    So yeah, ethanol works if you have SUGARCANE, not corn.

    1. “Bill Maher on his show once asked why we can’t do sugarcane ethanol like Brazil does. Gee, I dunno? Maybe we have almost zero areas of TROPICAL CLIMATE. It takes determined stupidity to “not know” something like that.”

      Send him an invitation to the surfing championship in Dodge City, KS; see if he shows up.

    2. If you travel through the western areas of Pernambuco and NE Bahia, there are huge fields and hill covered with sugarcane. I’m assuming that it grows pretty fast in that climate.

    3. “…yeah, ethanol works if you have SUGARCANE, not corn.”

      No. It doesn’t. It doesn’t work.

    4. “Bill Maher on his show once asked why we can’t do sugarcane ethanol like Brazil does.”

      We have quite a bit of sugarcane growing in my state and there’s often a surplus. The answer to the question lies not in the climate, but in the government legislated and subsidized US sugar industry.
      http://en.wikipedia.org/wiki/U.S._Sugar_Program
      http://www.washingtonpost.com/…..story.html

      So not only do our wise leaders specify that a staple food crop has to be turned into fuel, it stifles the use of a sensible alternative.

  7. t’s a policy that benefits special interests, raises prices on consumers, and harms the planet

    Are there any policies that don’t at least partially fit that description?

  8. vast swaths of North Carolina forest are being clear-cut to make wood pellets for use in Britain

    So, we’re back to chopping down wood for a fuel source? How can anyone define that as progress? It’s the exact opposite of progress. How long until we start living in holes in the ground again?

    1. How long until we start living in holes in the ground again?

      If you take environmentalism to its logical conclusion, that’s what you get. Well, except for the political class living in luxury, making sure the peasants don’t do anything to harm the planet.

    2. Gosh, it’s almost like they hate humans or something.

      1. Well they certainly don’t love the environment.

    3. I never stopped chopping down wood for fuel.

      Wood pellets were a good idea because they were a good use for waste wood that is difficult to use otherwise. In areas where it is efficient to produce them, they make a nice alternative to cord wood. If they are cutting wood just to use for wood pellets, that’s idiotic, shipping them across the ocean even more so. I think there is a place for biomass energy, but that place is in areas where there is surplus or waste material that is otherwise not used efficiently.

  9. It’s just cronyism all the way down.

    We should just go ahead and rename the country to The U.S.O.C.

  10. This is just insane. Its good to hear that the U.S.A. isn’t the only country with these sort of policies, though.

  11. “In some cases ethanol production requires more energy than the fuel delivers to your engine. ”

    No. Absolutely not true. In ALL cases ethanol production requires more energy than ethanol delivers. All cases.

    “…to help make food and gasoline more expensive while making global warming worse.”

    I realize this is probably sarcasm, but just in case it is not; THERE IS NO WARMING. Global warming is a hoax. It does not exist.

    1. Global warming is a hoax. It does not exist.

      I’m really not any more convinced of that than I am by the alarmists.
      Climate does change. Sometimes in a warmer direction. I don’t think anyone is in a position to make any definite claim about it one way or another.

      1. The recent warming trend was statistically consistent with warming trends in the past. The current cooling trend is also.

        None of the storms, floods, droughts, etc….weather events, are statistically more frequent or severe.

        The whole AGW and ACC are fabrications of the left. They do not exist.

  12. OH GOOD we didn’t have to wait long for McAuliffe to show us that he fully intends to be a corrupt crony capitalist but this is all legal so apparently it’s ok. Curious about the political donations they’ll get later ??

  13. To me, this renders the whole global warming/cooling controversy moot. When given the opportunity to make policy, greenos screw it up. They can believe in their little fairy tale all they like, but that should have no further impact on my life.

    1. Yup. I’m definitely leaning towards the “global warming is real and caused by industrial activity” end of the scale, but there’s no way I’d trust environmentalists with the power to regulate economic activity. They’d probably manage to boil the oceans.

    2. You have this all wrong, of course. The greenos didn’t screw this up. Well, at least they intend to. It’s never fair to criticize people whose intent is to help, regardless of the real world outcome.
      Obviously the real villains here are the capitalists who have taken a well meaning initiative and exploited it for financial gain. Shame on them!

    3. When given the opportunity to make policy, greenos screw it up.

      Consistently

  14. Ringo’s Law. . . in living color, complete with the bad smell.

  15. Corn has green husks. Therefore, they’re good to turn into fuel.

  16. It is frustrating to see Reason.com perpetuate the multi-million dollar campaign of misinformation led by Big Oil and its attacks on the only alternative to foreign oil. The ethanol industry is a homegrown, American industry that supports nearly 400,000 jobs across the country. Furthermore, ethanol saves motorists more than $100 billion at the pump annually.

    Trying to blame the ethanol industry for high food prices makes great headlines, but is not supported by the facts. A 2013 World Bank study has proven that crude oil prices are responsible for 50 percent of the increase in global food prices since 2004.

    While RINs have been blamed for increased gas prices, nothing could be further from the truth. To date, there is no evidence that RINs have impacted consumer gasoline prices. Oil companies that refuse to blend more renewable fuel may be paying a premium to other market participants, including speculators, but this is a choice they are making. The bottom line is that the more renewable fuel oil companies use, the less RINs are likely to cost them.

    Over the past decade, the Renewable Fuel Standard has helped us lower our dependence on foreign oil by 33 percent, revitalize rural America, improve the environment and provide consumers with a choice and savings at the pump. On average, it reduces greenhouse gas emissions by 34 percent compared to gasoline and is a smart energy policy that deserves our support.

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