Since the inception of the ethanol mandate a decade ago, the United States has undergone an energy transformation from a nation of energy dependence and scarcity to one of energy security and abundance. America has significantly increased domestic crude oil production and transitioned from a net importer of refined petroleum products to a net exporter. It is well past time to reform outdated energy policies to reflect the energy realities of today and tomorrow.

Today, most gasoline contains 10 percent ethanol by volume. However, if the Renewable Fuel Standard (RFS) requirements continue to be implemented, our nation could exceed this level of ethanol in the fuel mix. Extensive testing by the automotive and oil industries shows higher ethanol blends may result in damaged engines and fuel systems for owners of the overwhelming majority of cars as well as boats, lawnmowers and other gasoline engines. Automakers have warned these increased blends of ethanol could void car warranties. Increased RFS volumes could also cost consumers money and choice, and threaten far higher costs in the form of engine damage.

Simply stated, the RFS mandate creates potential harm to the American consumer. And it must be fixed. Recent surveys show that the American people agree, with nearly three-quarters of voters concerned about the potential harms created by the increasing prevalence of ethanol blends to over 10 percent of the fuel mix. The RFS has proven to be an unworkable program that must be eliminated.

Congress must repeal or significantly reform the Renewable Fuel Standard to protect American consumers.

When Congress created the Renewable Fuel Standard (RFS) more than a decade ago, lawmakers hoped the federal fuels program would spur development of a domestic biofuels industry that would help reduce oil imports with millions and millions of gallons of homegrown ethanol – with a particular focus on increasing volumes of cellulosic biofuel made from corn stover, wood chips, miscanthus or biogas. By 2022, it was expected that 16 billion gallons of cellulosic biofuel would be produced, but a couple of other things happened instead.

First, the U.S. energy revolution happened. Our crude oil imports fell mostly because of surging domestic oil production, not the RFS. Through safe hydraulic fracturing and horizontal drilling, American output grew from less than 6 million barrels per day to more than 9 million barrels per day – the growth in domestic production more than accounting for the reduction in net imports.

Second, a viable domestic cellulosic biofuels industry has not taken hold, with only a fraction of the fuel mandated by the RFS actually being produced.

The fact is, our new energy realities have made the RFS obsolete. It is a broken and outdated policy. Americans are not consuming as much gasoline as Congress estimated they would when the mandate was passed in 2007. That means current ethanol mandates push far more ethanol into gasoline than today’s vehicles can accommodate.

The Energy Independence and Security Act of 2007 (EISA07) assumed declining domestic production of crude oil and far greater crude oil imports. Both of these assumptions have been completely reversed by the shale oil revolution, both dramatically increasing North American energy production and increasing crude oil exports. The U.S. is now a global oil and natural gas superpower.

In addition EISA07 was based on significantly greater gasoline demand projections in 2007 than what became the reality. The Energy Information Administration’s 2013 Annual Energy Outlook projected 25 percent lower demand than the 2007 outlook, when EISA07 was enacted. Furthermore, cellulosic technologies were expected to develop within a few years of EISA07, but by the end of 2014, only one plant in the U.S. was producing cellulosic ethanol.

Declining gasoline demand, combined with increasing mandates, means we are approaching the limit of blending ethanol into gasoline (10 percent ethanol or E10) for widespread use. The EPA rushed through approval of an up to 15 percent ethanol blend (E15) without adequate testing. In addition to compatibility problems with E15, expanded use of another alternative fuel (E85) has not occurred due to poor consumer acceptance and significant infrastructure and cost challenges.

The RFS was based on economics and security perspectives that are much different from the reality of today’s energy landscape.

The EPA mandate for increased use of cellulosic biofuels is disconnected from reality. Though there was no commercial cellulosic production in 2010, EPA set the mandate for 2011 at 6.6 million gallons. There was no commercial production in 2011 either, yet EPA mandated 8.65 million gallons for 2012. Following this trend, the congressional statute called for 3 billion gallons of cellulosic in 2015 but only 142 million gallons were actually produced.

A total of 20,000 gallons were produced in 2012, but it was exported to Brazil and did not count toward RFS2 compliance (first chart).

Recognizing market realities, EPA used its authority under the RFS to lower the volumes from the statutory targets, but output did not reach those levels either. In 2013, for example, EPA lowered the cellulosic biofuel volume requirement to 4 million gallons (from the 1 billion gallons set out in law), but production was only about 500,000 gallons.

Clearly, the domestic cellulosic biofuel industry has struggled and indeed could be seen as losing ground, given the March 2016 filing for Chapter 15 bankruptcy protection by Spanish company Abengoa, which has sizeable cellulosic biofuel holdings in the U.S. With each passing year, EPA targets diverge further and further from actual production, creating expensive uncertainty for refineries busy meeting American fuel needs.

As biofuel mandates increase, the ethanol volume required for blending into gasoline will exceed 10 percent – known as the “E10 Blend Wall.” Declining gasoline demand accelerates and exacerbates the Blend Wall.

EIA demand projections for gasoline, E85 and combined ethanol consumption indicate RFS2 targets will not be met even if the cellulosic standard is waived — notwithstanding EIA’s optimistic projections about E15/ E85 acceptance. The oil industry’s ability to supply gasoline (as limited by the E10 Blend Wall) does not meet EIA demand projections.

Auto manufacturers and models recommendations for E15 in non-flex fuel vehicles as of January 2015. Most vehicles on the road today aren’t recommended for operating on E15 by manufacturers.

In response to lower gasoline demand EPA is trying to force increased use of E15 gasoline, fuel that contains up to 15 percent ethanol (compared to the standard grade used in the U.S. that contains up to 10 percent ethanol). Many groups are concerned about this effort, including automakers, AAA, the California Air Resources Board (CARB), and environmental non-profits. The stakes are high for consumers who could be left stranded on the roadside and/or stuck with potentially expensive repair bills.

Testing by the Coordinating Research Council (CRC), which has been the gold standard in vehicular research for the better part of a century, determined that millions of vehicles on the road today could suffer engine damage from using fuels containing higher levels of ethanol than for which they were designed. Likewise, a separate CRC study found that fuel pump systems could seize up or otherwise be damaged by highercontent ethanol fuel.

Some have suggested that requiring more production of higher ethanol-blend fuels like E15 and E85 can satisfy RFS mandates but these measures are expensive, temporary at best, and could have serious impacts on consumers and the broader economy.

E85 has several limitations. For starters, only flex-fuel vehicles (FFVs) can use it, which becomes a logistical issue because there is a lack of E85 pumps across the country – only about 2,500 retail stations out of more than 150,000 offer it. That’s not because “Big Oil” is blocking the sale of E85, but because there is a lack of consumer demand (see chart). Second, there is a mismatch between pump locations and FFVs, illustrated by a recent Department of Energy (DOE) Inspector General’s report that found DOE has been fueling its FFVs with regular gasoline instead of E85. This eliminates many supposed environmental or cost benefits of having a fleet of cars that can use fuel containing up to 83 percent ethanol. And finally, E85 has not been cost-competitive – just look at AAA’s website that tracks retail E85 prices.

RFS supporters who are desperate to avoid the blend wall suggest that E85 be “heavily discounted” to reach maximum sales, but the numbers do not add up: actual sales of E85 have never come close to the annual rate which would be needed to avoid the blend wall, and E85 is more costly on an energy-equivalent basis. Such arguments ignore ethanol market dynamics. Ethanol production has expanded and the U.S. has been a net exporter of ethanol since 2010. Trade flows of ethanol are responding to market signals, which appear to be placing a higher value on ethanol for its use as a lowlevel blend gasoline blendstock rather than as a highlevel blend as a gasoline replacement (such as E85).

Trying to come up with fairytale solutions to justify bad policies are just another distraction from the real problem: The RFS is fundamentally flawed and its ethanol mandates are broken. Rather than trying to push higher ethanol-blend fuels into the market, which the consumer is not even demanding (E85) or which could harm engines (E15), we need the Congress to address the RFS with long-term and meaningful action.

The RFS is a broken policy whose continued implementation could result in dire consequences for the broader economy, as well as negative impacts on consumers. Action is needed to protect the property and interests of everyday Americans, as well as the economy. We believe the RFS should be repealed or significantly modified, and most Americans and many other industries agree.

In testimony before the Senate Environment and Public Works Committee, Lucian Pugliaresi, President of the Energy Policy Research Foundation, Inc. (EPRINC), shared EPRINC’s conclusion that continuing to administer the RFS as written “would increase gasoline prices from approximately 30 cents to 50 cents a gallon” and cautioned Congress to address “the risk to economic recovery” this poses.

Furthermore, nearly 40 percent of the U.S. corn crop has been diverted from food to fuel since 2005, ultimately raising the consumer price index for food by 25 percent. This is proof that the policy is bad for consumers in addition to drivers and the overall economy.

“Lower gasoline prices are yielding annual savings for the U.S. economy of $129 billion, or an estimated $1000 per year per household. These savings to consumers are essential for expanding economic growth, particularly in light of the enormous losses we are seeing from rapid cuts in capital investment in domestic oil and gas development. … Great care should be taken to ensure that these savings are not lost through a regulatory program that increases gasoline prices.” – Lucian Pugliaresi, EPRINC President

The American Motorcyclist Association is well aware of the dangers of fuels with higher ethanol blends, like E15. Engine damage, engine failure and misfueling are just a few of the consequences of the RFS ethanol mandates.

“Thanks to the U.S. Environmental Protection Agency, there’s a new threat facing motorcyclists nationwide, and possibly all Americans. The danger is posed by a certain blend of motor vehicle fuel called E15, which may damage the engines of motorcycles, all-terrain vehicles, boats and powered equipment.”
—Wayne Allard, AMA vice president for government relations

“… E15 could lower fuel efficiency and possibly cause premature engine failure for motorcycles and ATVs.”
—AMA

“… the U.S. Environmental Protection Agency’s decision to allow E15 into the marketplace would impact every American who owns motorcycles and ATVs, not to mention cars, lawnmowers, boats and snowmobiles.”
—AMA

“… the U.S. Department of Agriculture was subsidizing ethanol production from the start by providing grants to purchase special ethanol blender pumps. … Agriculture Secretary Tom Vilsack announced in 2011 that the USDA intends to install 10,000 blender pumps by 2016. [Rural Energy for America Program] REAP will be a key component to achieve the secretary’s goal and, thus, help grow the availability of E15 fuel. These special ethanol blender pumps will further limit access to E10-or-less fuel in rural areas. This will be a problem because rural areas tend to have an older “legacy” vehicle fleet than other parts of the country. Moreover, rural areas are the most vulnerable places for motorcyclists and users of small engine devices because options for regular gasoline may be few or even non-existent. The REAP will help one segment of the rural economy at the cost of other segments. Ultimately, the higher costs will have a negative impact on small rural economies.”
—AMA

“Automobile and motorcycle manufacturers must certify that the on-highway vehicles they produce will meet applicable U.S. EPA and National Highway Traffic Safety Administration emissions, fuel economy and safety requirements prior to selling the vehicles. The fuel that the vehicles must use for this requirement is called the “certification fuel.” Changing the certification fuel to E15 or E30 is at odds with the 22 million motorcycles and all-terrain vehicles currently in use, not to mention the legacy fleet of cars, boats, lawnmowers, generators and hundreds of millions of small engines in commerce today. None of these vehicles and engines is designed to operate on fuel with more than 10 percent ethanol.”
—AMA

The National Marine Manufacturers Association (NMMA) has similar concerns about the RFS, since ethanol mandates also have the potential to cause engine damage for marine vessels.

“With nearly 13 million registered boats (and nearly 16 million boats in the field) and 70 million boaters nationwide, the recreational marine industry is a major consumer goods and services industry that contributed $30.5 billion in new retail sales and services to the U.S. economy in 2009 and generates nearly 340,000 jobs nationwide. … NMMA strongly opposed – and continues to oppose – the granting of a “partial” or “conditional” waiver for E15 or any other ethanol blend level over ten percent ethanol (“E10”) because it will substantially increase public confusion and lead to persistent misfueling and consequent engine performance failures, emissions control failures, and consumer safety concerns.”
—NMMA Comments to the U.S. Environmental Protection Agency

“The Department of Energy’s National Renewable Energy Laboratory has tested the effects of E15 gasoline on some standard marine engines, and the majority of these engines suffered significant damage or exhibited poor engine runability, performance, and difficult starting – none of which is acceptable on a boat at sea.”
—NMMA Letter

“… we have determined that e15 blends of ethanol would cause considerable damage to the 7.5 million outboard engines in use in this country today. This damage is unnecessary and can be avoided by freezing the ethanol content of gasoline at 10% by volume. NMMA has never been anti-ethanol. We are simply opposed to fuel blends that will ruin our engines and place lives at risk.”
—Thomas J. Dammrich, President NMMA

“There is a significant amount of technical and anecdotal information that concludes that the introduction of E10 into the gasoline supply has caused significant damage and failure to boats. Although boat and engine manufacturers have adjusted and now design equipment to run on E10, the introduction of E15 will result in:

  • Damage to rubber parts;
  • Water contamination in the fuel system due to ethanol’s hygroscopic properties;
  • Increased water absorption and phase-separation of gasoline and water while in tank;
  • Corrosion of fuel system components and fuel tanks;
  • Higher exhaust gas temperature due to enleanment; performance issues, such as drivability (i.e. starting, stalling, fuel vapor lock);
  • Damage to valves, push rods, rubber fuel lines and gaskets.”
    —Minnesota Testimony, NMMA

“Currently, there are nearly 13 million registered recreational boats in operation in the U.S. No gasoline marine engine – or any other marine equipment including gasoline generators – currently in the field was designed, calibrated, certified or is warranted to run on anything over 10 percent ethanol.”

“EPA’s own “engineering judgment,” as well as all available data (supported by these two new studies), strongly suggests that all of the 12.8 million registered boats on the water today (with the exception of approximately 260,000 diesel-powered boats and the roughly 430,000 registered non-motorized craft) may be negatively impacted by any gasoline with more than a 10 percent ethanol blend.”
—NMMA Petition to EPA

“The Renewable Fuels Standard must be revised to prevent the damage that ethanol blends above the 10% level will cause to engines of all types. … Unless the renewable fuels mandate is changed, it is likely that EPA would require 35%-40% ethanol in gasoline by the year 2022. Every time EPA changes the percentage of ethanol in gasoline, engines have to be recalibrated and engine designs changed.”
—NMMA Policy Brief

The RFS is dangerous for outdoor power equipment just as much as it is for automobiles and other vehicle engines.

“Our interest is to protect the consumer; we’re trying to prevent the harm from happening in the first place. … EPA has acknowledged there will be mis-fueling with E15; there will be engine and product failure. This is the reason the outdoor power equipment, boating, UTV, snowmobile, auto, and motorcycle industries, as well as the American Automobile Association (AAA) and the Coast Guard, oppose this higher ethanol fuel. Our interest is in protecting our customers.”
—Kris Kiser, OPEI President and CEO

Will this damage my lawnmower, boat, jet ski, snowmobile, or four-wheeler?

“It sure will if you don’t pay attention. Generally, small engines are not designed to deal with the more corrosive E15 blend. And, as we mentioned in 2010, ethanol forms a brown goo when left in a fuel tank too long, which can clog fuel-system components. Two-stroke engines run hotter with an ethanol blend, which accelerates the potential damage. And ethanol can wreak havoc on fiberglass fuel tanks in older boats. Groups like the National Marine Manufacturers Association and Outdoor Power Equipment Institute have issued strong warnings to consumers to pay attention to their fuels or risk severe engine damage. Use a fuel stabilizer if the engine will sit for more than a few weeks without use; this will reduce the ethanol–water separation and potential gumming issues. Be careful to avoid using E15 in uncertified engines like these, at least until the subject is studied more thoroughly, and the engineering catches up to the fuel.”
—Popular Mechanics

Are higher ethanol blends really that harmful to outdoor power equipment?

“Yes. You might be tempted to use a higher ethanol blended fuel since it may be less expensive. However, greater than 10 percent ethanol in outdoor power equipment can corrode metals and rubber and cause engines to break down more quickly. Most outdoor power equipment was not built, designed or warranted to run on fuel greater than E10, and using higher ethanol blends can damage or destroy it. In fact, using any fuel that contains more than 10 percent ethanol is illegal to use in outdoor power equipment. Also, the higher the ethanol blend, the lower the fuel economy. Ethanol contains 33 percent less energy per gallon than gasoline, so engines fueled with higher ethanol blended gas will attain fewer miles per gallon than those running on conventional gasoline (E10). This means you must fill your gas tank more frequently when using higher ethanol blended fuel.”
—OPEI

“Manufacturers of outdoor power equipment and their engines say they will not honor the warranty of a product someone has been running with E15. The reason? Besides the above effects of ethanol, engines running even E10 gasoline run hotter. And with E15, the results can be dangerous, considering reports of “unintentional clutch engagement”—such as a powered-up chain saw that suddenly decides, because it’s running so hot, that you’ve pressed the button to start the chain. Manufacturers see a train wreck coming because their customers will ultimately blame them for problems.”
—Consumer Reports.org

“E15 is universally opposed by our entire industry because of the problems it causes. … Research has shown that using E15 can have harmful and costly consequences on small engines and outdoor power equipment. Most engines would have great difficulty in meeting both emissions and performance expectations with this type of alcohol range. … Most gas stations have tanks where the supplier puts the mixed gasoline into the storage tank and the pump pumps it up. Because alcohol separates from gasoline, consumers can get a higher mix of alcohol in their fuel. If you increase to 15%, the effect gets multiplied, so you might end up with double the alcohol you expected. That’s a problem.”
—Brad Murphy, of OPEI member Subaru Industrial Power Products

  1. NERA Economic Consulting, “Economic Impacts Resulting from Implementation of RFS2 Program” http://bit.ly/18yUahQ
  2. Coordinating Research Council, “Intermediate-Level Ethanol Blends Engine Durability Study” http://bit.ly/12dCjS0
  3. Coordinating Research Council, “Durability of Fuel Pumps and Fuel Level Senders in Neat and Aggressive E15” http://bit.ly/12dCHju
  4. Rep. Sensenbrenner, “E15 Automaker Responses” http://1.usa.gov/12dCSLJ
  5. AAA, “New E15 Gasoline May Damage Vehicles and Cause Consumer Confusion” http://bit.ly/12dCZqw
  6. Environmental Working Group, “Senators Seek to Block Higher Ethanol Blend” http://bit.ly/12dD5yw
  7. National Academy of Sciences, “Potential Economic and Environmental Effects of U.S. Biofuel Policy” http://bit.ly/12dF0TL
  8. Stanford University, Center for Food Security and the Environment http://stanford.io/12dFfOO
  9. Food and Agriculture Organization of the United Nations, “OECD-FAO Agricultural Outlook 2012-2021” http://bit.ly/12dFk51
  10. World Bank Policy Research http://go.worldbank.org/QPII43RIJ0
  11. Schornagela, Niele, Worrell, and Böggemann, “Resources, Conservation and Recycling; Water accounting for (agro) industrial operations and its application to energy pathways”, December 2011. www.elsevier.com/locate/resconrec
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  13. Energy Tomorrow, Bob Greco Blog http://bit.ly/17JzgbE
  14. Energy Tomorrow Blog, Mark Green, “The RFS is Broken” http://bit.ly/1997VzZ
  15. Energy and Power Subcommittee, House Committee on Energy and Commerce, “Overview of the Renewable Fuel Standard: Government Perspectives,” June 2013 http://1.usa.gov/1e3OKIU