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…..”
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.