The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

The Renewable Fuel Standard: Should US corn feed mouths or fuel tanks?

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Congress, it’s your move, say Oxfam and an unlikely group of stakeholders

Sameerah Siddiqui is the Coordinator for the GROW Campaign at Oxfam America.

Maize that will be stored in a village grain bank in Tambala, Mulanje, Malawi. Food prices in 2011 in Malawi were at historically high levels.  Photo: Carlo Heathcote / Oxfam.
Maize stored in a village grain bank in Tambala, Mulanje, Malawi. Food prices in Malawi over the last few years were at historically high levels. Photo: Carlo Heathcote / Oxfam.

Today the Senate’s Environment and Public Works Committee is conducting an oversight hearing of the Renewable Fuels Standard (RFS). Committee members will examine this morning, among other things, the harm this flawed policy has created.

Biofuel programs such as the RFS encourage the diversion of large amounts of US corn into biofuels. About 85% of the renewable fuel in the US is corn ethanol and currently about 40 percent of the US corn crop goes to ethanol production. This has resulted in a 15% reduction in global corn supplies, a major factor in driving corn prices to near historic highs, along with the price of other grains influenced by the supply and demand of corn.

This has been injurious for the world’s poor, who spend up to 80% of their household income on food. A joint study by Tufts University and ActionAid estimated between the years of 2005/6 and 2010/11, the US expansion of corn ethanol cost people in developing countries $6.6 billion in higher corn prices. Increases in household food budgets mean less or no money for other essentials such as school and medical care, undermining not only the efficacy of US aid dollars but also years of development. Congressional action is therefore needed to reform the Renewable Fuel Standard (RFS) so that our nation’s energy supply doesn’t endanger the food security of millions of people.

Despite numerous reform bills circulating in Congress, committees with jurisdiction over the policy, such as EPW, have been slow to move legislation forward. They had been waiting for the Environmental Protection Agency (EPA) to make their 2014 rule on the volume of renewable biofuels to be blended into our fuel supply,

The EPA’s proposed rule, which slightly lowers the federally-mandated level of corn-based ethanol in our nation’s gasoline, at least recognizes that the amount of corn ethanol mandated to go into the fuel supply is not workable. Reducing ethanol demand in the short term can lower the price of corn, which alleviates pressure on the food markets globally.

Congress had hoped that this would allay growing public criticisms. But the EPA’s proposed rule does not give Congress a pass. What the EPA’s rule does not address is the year-after-year increase until 2015 of the amount corn ethanol to be produced and that is needed to fulfill the RFS mandate. The EPA’s announcement was not driven by the needs of the global population, but rather two other realities: declining gasoline consumption that prevents higher blends of biofuels beyond E10 in our fuel supply, and the lack of enough commercially-available cellulosic and other advanced biofuels to meet the RFS mandate for the coming year.

Far from achieving its stated objectives of sweeping reductions of greenhouse gases emissions or hastening the transition to advanced biofuels, the corn ethanol mandate of the RFS has stripped away the food security of the world’s poorest people, even if unintended. When the RFS was expanded in 2007, this prompted a dramatic scale up corn ethanol production. The National Academy of Sciences estimated that food prices nearly doubled, and biofuel production accounted for 20-40% of that increase. To put that in perspective, Guatemala, now a net importer of corn, spent $28 million more in 2010/11 on corn imports, six times more than US aid to that country the same year.

Yesterday Oxfam America joined an diverse band of organizations – agriculture, business, environment, food retail, taxpayer, and public interest and consumer groups – calling on Congress in Politico to eliminate the corn ethanol mandate of the RFS.

People in poor countries deserve more than a temporary reprieve from the tyranny of high food prices; they need a solution to the food price crisis that has been driven in significant part by biofuel programs such as the RFS.

Let Congressional leaders know the next move is theirs.

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  1.'Blayne Tonsfeldt

    We currently have the RFS(Renewable Fuel Standard) in place and we have an oversupply of corn and the lowest prices since 2007 when the RFS was implemented. If ethanol is the reason for not feeding mouths across the world why is there a glut of corn in the market? Gasoline needs an oxygenate in order to burn cleaner and ethanol is a safe way to provide that oxygenate. The alternative currently would be to go back to MTBE (methyl tertiary butyl ether) to provide the oxygenate for fuel. MTBE is a carcinogen produced by big oil that has polluted ground water all across this country. My choice is to provide a safe, clean burning fuel with ethanol and at the same time provide thousands of American jobs and billions of dollars of revenue to our economy.

  2. Jim French

    Oxfam does not take a position opposing bio-fuels or the useful contribution that biofuels might make in making fuel burn more efficiently and effectively. The Renewable Fuel Standard was formulated from the beginning with the intention that grain-based ethanol would reach a ceiling beyond which new generation feedstocks would come in to production. Whether corn is in surplus or in shortage is not really the point. The RFS should never have been conceived as a market support for the grain producing sector; neither should the impact of the standard upon end-user food markets be ignored. As a farmer myself, my primary concern is that as we make the important transition to a clean energy future, but don’t create distortions in global food prices, resulting in unintended consequences that negatively impact people’s right to affordable food.

  3.'Blayne Tonsfeldt

    I agree that new generation feedstocks (cellulosic ethanol) should be an integral part of the RFS. I do not believe that the RFS has been a market support. Yes corn prices have been higher the last five years but they are now back to 2007 levels which are below the cost of production for corn. American farmers are the most efficient agriculture producers in the world and will find a way to meet demand. The RFS has helped generate jobs, revive rural economies, reduce oil imports, lower gasoline prices, reduce air pollution, and cut greenhouse gas emissions. They are many factors involved in global food prices increasing. Foreign demand by expanding economies such as India and China would be one significant factor. The healthier our economy, the better our ability as American citizens to help provide affordable food through organizations like Oxfam.


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