Carpe Diem

The law of unintended consequences confirmed. Again.

A good example here of the Law of Unintended Consequences – the Renewable Fuel Standard (RFS) was supposed to lower CO2 emissions, but has actually significantly raised them.  As my friend Dennis Gartman likes to say, “If it wasn’t so sad this would be funny…..”

Thomson Reuters Foundation is reporting that:

U.S. policy to boost the use of fuel from renewable sources is generating additional greenhouse gas emissions due to rising trade in ethanol between the United States and Brazil, rather than lowering emissions as intended, research by Thomson Reuters Foundation shows.

Washington created the Renewable Fuel Standard (RFS) in 2005, requiring 10 percent of every gallon of gasoline to be derived from biofuels. An update to the RFS, which took effect in July 2010, stipulates that a proportion of the mandate must be met by fuels with lower greenhouse gas emissions than corn ethanol, which is home-grown and plentiful.

This policy change created an incentive for U.S. companies to import sugarcane ethanol from Brazil, a major producer, as it produces fewer emissions. At the same time, more corn ethanol made in the United States is now being exported to Brazil, as U.S. demand has dropped.

As a result, since the start of 2011, the United States and Brazil have shipped over 1 billion gallons of ethanol back and forth – more than 500 million gallons each way. The emissions generated by the shipping have worsened the carbon footprint of both fuels.

Thomson Reuters Foundation found that this overseas trade has produced more than 312,000 tonnes of carbon dioxide (CO2) since the start of 2011, based on an industry method used to calculate greenhouse gas emissions from shipping. This equals a ratio of one tonne of CO2 emitted for every 10 tonnes of ethanol transported between the two countries.

To absorb that amount of carbon dioxide out of the atmosphere, 8 million tree seedlings would need to be grown over 10 years, according to a U.S. Environmental Protection Agency (EPA) emissions calculator.

4 thoughts on “The law of unintended consequences confirmed. Again.

  1. And in a classic governmental response to the unintended consequences of the original market intervention, of course the solution to the problems created is more regulation/market intervention!!

    But of course this new market intervention will be perfect and won’t have any unintended consequences, unlike every other government intervention…..

    “Environment experts say the United States has two options: continue to undermine the aims of the RFS by encouraging ethanol trade, or change policy to spur a move towards cleaner biofuels.

    Tim Wise, a director at the Global Development and Environment Institute at Tufts University and a researcher with ActionAid, said incentives need to be put in place to develop advanced biofuels other than imported sugarcane ethanol. Otherwise, “we can see the early warning signs of a worrying trend,” he said.”

  2. You’ve got to be kidding me. Once distilled, ethanol is ethanol–it’s just CH3CH2OH. Shipping a gallon from the US just to ship a different gallon back is a complete waste.

    What I don’t understand is why Brazilians want US corn-derived ethanol. Is it now cheaper than their own locally produced ethanol? I smell a business opportunity: selling ethanol origin certifications without moving the bulk liquids around.

  3. “With Congress, every time they make a joke it’s a law, and every time they make a law it’s a joke.”

    -Will Rogers

    It used to be that Congress voted on laws the text of which they did not understand. Now they vote on them before they even become text. That is, vote on this and then the bureaucrats will actually write it and let you know what is says.

    If you go to a Congressman’s town hall meeting and ask a question about legislation he voted for it becomes obvious that he does not understand it.

    Obamacare anyone?

  4. Forget fighting ethanol.

    It is another totem in the Red-Pink State Socialist Empire.

    Once a USDA program is started, it grows forever, like kudzu.

    Just remember: Use of ethanol is mandated by federal edict; and corn production is subsidized by direct cash payments.

    Oh, then you, the taxpayer, also pay premiums to gift corn farmers with federal crop insurance, and you the taxpayer also pay for losses under the federal crop insurance program.

    But is ethanol a socialist program?

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