Karen Kerrigan: The broken promises, politics of corn ethanol

Public trust in the federal government has reached an all-time low. In fact, Gallup recently reported that trust in the government is lower than during the Watergate era. Clearly, there is a huge disconnect between national politics and politicians and the real-world views of Americans and the policies that impact their lives.

The federal corn ethanol mandate, also known as the Renewable Fuel Standard, is one example of how national politics play into an issue that makes absolutely no sense in people’s lives. Since 2005, the standard has forced billions of gallons of ethanol to be produced and mixed into gasoline, enriching corn-growing states and corporations in the Midwest at the expense of consumers, small businesses and farmers across America.

Ethanol contains one-third less energy than gasoline, which mean motorists are forced to buy more fuel than they did before to travel the same distance.

That means the program has imposed $13.1 billion in higher fuel costs on Golden State consumers since 2005. It gets worse, with an additional $28.8 billion to come over the next 10 years, according to a new report from the Center for Regulatory Solutions, a project of the Small Business & Entrepreneurship Council, where I serve as president and CEO.

In effect, the Renewable Fuel Standard is imposing a $42 billion “ethanol tax” on California consumers, with the vast majority of the proceeds going to out-of-state ethanol producers.

The ripple effects of this huge wealth transfer include $31.6 billion in lost GDP growth in California by 2024, more than 17,000 lost jobs per year, and hundreds of millions of dollars in higher costs for dairy and poultry farmers, because rising demand for corn ethanol has increased the cost of corn-based animal feed. And instead of cutting emissions – as program supporters have promised – California’s consumption of corn ethanol has actually generated an extra 6.3 million metric tons of carbon dioxide – equivalent, roughly to putting 1.3 million cars on the road for one year.

But the Renewable Fuel Standard hangs on because of the corn ethanol lobby’s power in Congress and because Iowa – a corn-growing state – plays a key role in presidential politics. For example, the ethanol lobby counts six Republicans and all three Democrats running for president as strong supporters of the program. Even billionaire environmental activists like Tom Steyer have learned to toe the pro-ethanol line.

Not too long ago, Steyer used to mock former Vice President Al Gore for once supporting corn ethanol. But now that Steyer is a national political player, his campaign arm, NextGen Climate, calls the Renewable Fuel Standard “an important program” that produces “clean energy.”

Steyer’s flip-flop is working against years of California leadership in the ethanol debate and the reforms that are sorely needed.

U.S. Sen. Dianne Feinstein is leading the charge to fix “unwise and unworkable” corn ethanol policies, along with other California lawmakers, including U.S. Reps. David Valadao and Jim Costa. In 2013, Democrats and Republicans in Sacramento united behind a joint resolution urging Congress to overhaul the Renewable Fuel Standard and “transition away from biofuel sources that compete with food production.”

The case against the corn ethanol mandate is so strong that environmental organizations like San Francisco-based Sierra Club and limited-government groups like Americans for Tax Reform agree the program is broken.

It’s time for national political players to stand up to the corn ethanol lobby and demand major Renewable Fuel Standard reforms. Californians have suffered enough already from this misguided and failed federal program.

This story was originally published November 21, 2015 at 1:04 PM with the headline "Karen Kerrigan: The broken promises, politics of corn ethanol."