Climate change and Free trade

[newguy]

As an exporting country sometimes our customers can control us.And if that is what it takes to make a deal so be it.Like anything learn to pick your fights.

[chuckChuck]

Most of the ten last years of relative prosperity in the grain industry were largely the result of ethanol and bio-diesel subsidies and incentives in the good old USA which in effect were also subsidies to farmers there and here. Farmers essentially benefited from state intervention in the grain and energy markets. Farmers benefited from increased prices that drove up the cost of food for everyone. It's funny how otherwise free market supporting farmers think subsidies to famers are okay.

[Hamloc]

The U.S. ended direct subsidies to ethanol in 2011. That certainly doesn't make the subsidies prior to that any better. I think Government certainly pick and choose industries they wish to support and expand. It is no different than the push to support green energy, something you support Chuck2. When a government chooses to subsidize a industry we all pay one way or another. I think the increased demand for corn undoubtably created a better market for grains. Will governments investment in green energy create the same economic returns?

[checking]

chuckchuck.

There is something quoted about throwing stones.

Is your kettle not a little black?

[chuckChuck]

http://www.ourenergypolicy.org/wp-content/uploads/2013/07/The-Effect-oftheUS-Ethanol-Mandate-on-Corn-Prices-.pdf


The
Effect
of
the
US
Ethanol
Mandate
on
Corn
Prices
Colin
Carter
Department
of
Agricultural
and
Resource
Economics
UC
Davis
Ph:
530
‐
752
‐
6054
Email:
cacarter@ucdavis.edu
Gordon
Rausser
Department
of
Agricultural
and
Resource
Economics
UC
Berkeley
Ph:
510
‐
643
‐
9942
Email:
rausser@berkeley.edu
Aaron
Smith
*
Department
of
Agricultural
and
Resource
Economics
UC
Davis
Ph:
530
‐
752
‐
2138
Email:
adsmith@ucdavis.edu

[chuckChuck]

The Renewable Fuel Standard still requires fuel in the US to contain bio-fuels. It is difficult to assess the impact on prices but the demand for corn and oil seeds is much higher because of the RFS. Indirectly this is still a subsidy to farmers as it artificially increases demand for crops. Prior to 2011 the indirect subsidy to farmers amounted to billions. Check out the opinion bellow.

Examining the Renewable Fuel Standard
The House of Representatives Committee
on
Oversight and Government Reform
Subcommittee
on the Interior and the Subcommittee on
Healthcare, Bene
fits, and Administrative Rules
March 16, 2016
Nicolas Loris
Herbert & Joyce Morgan Fellow
The Heritage Foundation
2
My name is Nick Loris. I am the Herbert & Joyce Morgan Fellow at The Heritage Foundation. The views
I express in this testimony are my own,
and should not be construed as representing any official position
of The Heritage Foundation.
I want to thank the members of the
Committee of
Oversight and Government Reform Subcommittee
s
on the Interior and
on Healthcare, Benefits, and Administrative Rul
es
for this opportunity to
address the Renewable Fuel Standard.
The federal government provides a wide range of
subsidies
to
boost the production and
consumption
of biofuels.
Over several decades
, Congress
has
enacted special tax breaks, direct
grants, gov
ernment
-
backed loans and loan guarantees
to
generate a larger
biofuel and biodiesel
market
.
1
The main
component
of
the
U.S.
’s
biofuel policy is the Renewable Fuel Standard
(RFS), created in 2005 through the Energy Policy Act of 2005, and expanded in the Energy
Independence and Security Act of 2007, mandating billions of gallons of ethanol be blended into
gasoline each year, with
a peak of 36 billion gallons in 2022. After 2022,
the
E
nvironmental
P
rotection
A
gency (EPA)
has discretion to set the limit
(within certain limitations)
.
2
To
rationalize
the RFS
, p
olicymakers
promised reduced dependence on foreign oil, a new source
of cl
eaner energy to lower gas prices,
a stronger economy
,
and an improved environment.
None
of this has materialized.
Instead, the quota caters to special interest
group
s and has adverse
effects on the economy and the environment. Subsidizing biofuel production benefits a select
few and spreads the costs amongst the rest of American families and businesses.
Even within
the
agricultural community, biofuel handouts reward t
hose connected to
the policy and adversely
affect
large parts of rural America.
The problem
with the RFS is
not
the use of biofuels themselves but
rather a
policy that mandates
the
production and consumption of the fuel
.
Having politicians centrally plan
e
nergy decisions
best left
for the private sector
distorts markets
and
demonstrates
the high costs and unintended
consequences of government
control
.
The
RFS
distorts
commodity
production and prices,
artificially raises the price of fuel
and food,
and has adverse environmental effects. The
alleged
climate benefit increasing biofuel use
is dubious at best.
Even under the
assumption
that
switching from oil to biofuel would reduce greenhouse gas emissions,
the impact
of the switch
on the earth’s tempe
rature would be negligible.
Congress should not
tinker around the edges with attempts to reform
the
RFS. Policymakers
should recognize
the mandate
is a failure and the government has no legitimate place propping
up one energy source or technology over ano
ther.
Congress should eliminate
the
RFS
entirely
and
empower
free enterprise to drive fuel competition and choice.
The Renewable Fuel Standard
1
U.S. Department of Energy,
Alternative Fuels Data Center
“Federal Laws and Incentives for Biodiesel,”
http://www.afdc.energy.gov/fuels/laws/BIOD/US
(accessed November 13, 2015).
2
Energy Independence and Security Act of 2007, 110th Cong., 1st Sess., §202
,
https://www.govtrack.us/congress/bills/110/hr6/text
(accessed January 22, 2016)
.
3
The
Renewable Fuel Standard
is o
ne of the
most
egregious
examples of government meddling in
the energy economy
.
The Energy Policy Act of 2005
first
mandated that renewable fuels be
mixed into America’s gasoline supply,
primarily using corn
-
based ethanol
.
T
he Energy
Independence and Security Act
of
2007
significantly
increased the quotas. By 2022, there must
b
e 15 bi
llion gallons
(
and
no more)
of corn
-
based ethanol and
a
total of 36
billion gallons
of
biofuels
blended
in
to
the nation’s fuel supply
, including soybean
-
based biodiesel
.
The program
does not end
in 2022
, however, but grants the EPA
the
authority
to
set
yearly targets.
3
The biofuels mandate
gives preferential treatment to the production of corn and soybeans
at the
expense of other agricultural products
and artificially eliminates the risk and competition
necessary
to drive innovation and economic growth
.
The economic and environmental problems
caused by the R
FS
ha
ve
resulted in a diverse group opposing the mandate including
environmental organization
s
, world hunger activists, economists, energy companies
,
and many in
the agricultural community.
Within the
agriculture community, the National Chicken Council,
National Cattlemen’s Beef Association, National Pork Producers Council,
National Turkey
Federation, Milk Producers Council,
to name but a few
,
4
have called on Congress to repeal
the
standard.
Other p
rom
inent groups like
the
A
merican
P
etroleum
Institute
, N
ational
R
esource
D
efense
C
ouncil
, A
merican
F
uel and
P
etrochemical
M
anufacturers
, E
nvironmental
W
orking
G
roup
, Oxfam, and the United Nations have decried
preferential treatment for corn ethanol
.
5
Besides
the near universal outcry, the policy itself is reaching a breaking point as basic
assumptions about the future on which it was built, such as national gasoline consumption and
the
commercial
viability of
advanced
biofuels, are crumbling. Yet power
ful biofuel lobbies have
thus far successfully wooed Congress to withhold action on the RFS
and its destructive economic
and environmental effects.
Free Markets vs. Government Intervention in Energy Policy
While the exact relationship between energy consu
mption and gross domestic product (GDP) can
vary, it is clear that energy is important to a nation’s economic growth
.
Studies have shown that
a causal relationship exists between energy consumption in economic growth; that is, energy
availability can influ
ence increases in gross domestic product or that causality moves in both
directions
.
6
When
the free market operates, resource extraction and production expands greatly,
3
Ibid
.
4
National Pork Producers Council
et al,
“Petition for Waiver or Partial Waiver of Applicable Volume of Renewable
Fuel,” l
etter to EPA Administrator Lisa Jackson, July 30, 2012,
http://www.nppc.org/wp
-
content/uploads/20120730
-
mf
-
Final
-
RFS
-
Waiver
-
Petition.pdf
(accessed October 1, 2
015).
5
Carlton Carroll, “API and AFPM
T
ell EPA to
P
ut
C
onsumers
F
irst
W
hen
S
etting
E
thanol
M
andates,”
American
Petroleum Institute
July 27, 2015,
http://www.api.org/news
-
and
-
media/news/newsitems/2015/july
-
2015/api
-
and
-
afpm
-
tell
-
epa
-
to
-
put
-
consumers
-
first
-
when
-
setting
-
ethanol
-
mandates
(accessed November 12, 2015) .
Natural
Resources Defense Council, “Let the VEETC Expire: Save Billions in Tax Dollars Better Spent on Non
-
Polluting
Energy Technologies,” June 2010,
http://www.nrdc.org/globalwarming/fil
es/VEETCfs.pdf
(accessed November 12,
2015). Sarah Kalloch, “Burning
D
own the
H
ouse: Corn as
F
uel,
N
ot
F
ood,” Oxfam America, October 4, 2012,
http://politicsofpoverty.
oxfamamerica.org/2012/10/corn
-
as
-
fuel
-
not
-
food/
(accessed November 12, 2015).
Environmental Working Group, “EPA’s Biofuels Mandates are Unworkable,” February 7, 2013,
http://www.ewg.org/release/epa
-
s
-
proposed
-
biofuels
-
mandates
-
are
-
unworkable
(accessed November 12, 2015).
6
Ross McKitrick and Elmira Aliakbari,
“
Energy Abundance and Economic Growth: International and Canadian
Evidence,
”
Fraser Institute, May
15,
2014,
4
innovative technologies generate promising opportunities, and job creation and the
economy
grow robustly.
Over the years, federal policies have blocked access to opportunities, unnecessarily delayed
projects, mandated expensive energy production, restricted choice, and given handouts to
politically connected energy technologies. Politici
ans tout these programs as means to usher in
new technologies that will provide jobs and stimulate the economy. The reality, however, is that
these policies play favorites by allocating special benefits to the well
-
connected, rather than
creating a playing
field that provides
opportunity for all to compete. The RFS is certainly an
example of such favoritism.
Perhaps
the
most perverse
part of
these subsidies
is that
significantly obstruct the long
-
term
success and viability of the technologies and energy sou
rces they intend to promote. Instead of
relying on a process that rewards competition, taxpayer subsidies prevent a company from truly
understanding the price point at which the technology will be economically viable. When the
government plays favorites, i
t traps valuable resources in unproductive places and allocates labor
and capital away from other investments.
If biofuels are to succeed as a competitive transportation fuel, it will not be the result of any
taxpayer
-
funded handout or government
-
imposed m
andate. Whether the industry flourishes or
fails, that is for private actors, using their own
investment dollars
, to determine. This holds true
not just for biofuels, but for all energy resources and technologies.
The
U.S.
has a robust, diverse
energy mark
et that can supply consumers with affordable and reliable energy without the
taxpayers’ help.
Evidence indicates that certain biofuels are cost
-
competitive with traditional fuels and make a
useful addition to gasoline without special privileges from Washington.
Before any subsidies and
the current biofuels mandates were put in place, ethanol already served as a valuable additive to
gasoline to oxy
genate fuel to burn it more cleanly and efficiently.
7
The use of biofuels is not new
and does not originate from any government policy jumpstarting an infant industry; in fact,
Henry Ford originally planned for the Model T to run off ethanol
and, i
n 1897,
Rudolf Diesel
showcased a diesel engine running on peanut oil.
8
In the year before the federal government mandated the production of ethanol, the
U.S.
produced
over 81 million barrels of ethanol.
9
A recent report by the University of Tennessee Institute o
f
Agriculture estimates that in a market with no RFS and no ethanol tax credit, demand for corn
ht
tps://www.fraserinstitute.org/sites/default/files/energy
-
abundance
-
and
-
economic
-
growth.pdf
(accessed November
13, 2015).
7
U.S. Energy Information Administration
,
“
Petroleum & Other Liquids: Ethanol Oxygenate,” September 30, 2015,
http://www.eia.gov/dnav/pet/pet_pnp_oxy_dc_nus_mbbl_a.htm
(accessed October 1, 2015). U.S. Geological
Survey, “Fuel Oxygenates,” August 4, 2015,
http://toxics.usgs.gov/definitions/fuel_oxygenates.html
(accessed
November 13, 2015).
8
“Biofuel Facts,” Biofuel.org.uk,
http://biofuel.org.uk/biofuel
-
facts.html
(accessed November 13, 2015
).
9
U.S. Energy Information Administration, “Petroleum & Other Liquids: Ethanol Oxygenate
.
15
conversion plants
to meet largescale demand have prevented non
-
food
-
sourced ethanol from
being an economically viable option.
The EPA
, which administers the RFS,
has reduce
d
Congress’ original annual quotas for
cellulosic ethanol every year
,
as
required by the mandate
,
bec
ause not enough was available on
the market. EPA adjusted Congress’ first cellulosic target from 100 million gallons in 2010 to
just 6.5 million. However, even the adjusted mandate was a stretch compared with reality; in
fact, zero gallons were produced th
at year and the following
year
.
53
Consequently, refiners had to pay millions of dollars in waiver credits or surcharges for failure to
comply with the EPA’s minimum volume requirements. Refiners necessarily passed those costs
on to the consumer. In January
2013, the D.C. Circuit Court of Appeals ruled that EPA “let its
aspirations for a self
-
fulfilling prophecy divert it from a neutral methodology” and that the target
was an “unreasonable exercise of agency discretion.”
54
It vacated the cellulosic ethanol
req
uirement required by the RFS
for the year 2012
. The EPA has since proposed cellulosic
mandates for 2014
-
2016 that are equally as out of touch with market realities.
Conclusion
Longtime proponents of the ethanol mandate have since recognized the problems c
orn
-
based
ethanol. In fact, several Members of Congress have introduced legislation to repeal only the corn
requirement of the Renewable Fuel Standard.
55
Removing corn’s share of the requirement,
perhaps the most economically viable part of the mandate
,
is
problematic for several reasons.
Biodiesel generated from soybeans presents the same food
-
for
-
fuel problem
that
the corn ethanol
mandate does.
Advanced biofuels from non
-
food based sources are the least economically
competitive and demonstrate just how inc
ompetent the federal government is at centrally
planning what the market can bear.
Furthermore, each part of the Renewable Fuel Standard and
the federal government’s promotion of biofuels create unintended environmental concerns.
Congress should
r
epeal
the ethanol mandate in its entirety
and allow consumers a choice at the
pump
.
Biofuels have existed long before the Renewable Fuel Standard and if economically
competitive, will remain long after it.
Removing the mandate will spur a healthier market that
p
romotes risk taking and entrepreneurial activity rather than government dependence for near
-
term survival through favorable policies and tax treatment.
Importantly, policymakers should not
just repeal the corn
-
based part of the ethanol mandate, leaving the
least competitive part, the
cellulosic requirement.
Furthermore, Congress should u
se the repeal of the mandate as momentum for greater reform in
the energy sector that further levels the playing field for all energy companies and technologies.
53
U.S. Environmental Protection Agency, “Fuels Registration, Reporting, and Compliance Help,” September 28,
2015,
http://www.epa.gov/otaq/fuels/rfsdata/2010emts.htm
(accessed November 13, 2015).
54
U.S.
Court of Appeals for the District of Columbia Circuit,
American Petroleum Institute vs. Environmental
Protection Agency
, January 25, 2013,
http://www.cadc.uscourts.gov/internet/opinions.nsf/A57AB46B228054BD85257AFE00556B45/$file/12
-
1139
-
1417101.pdf
55
Press release, “Toomey, Feinstein Introduce Bill to Repeal Ethanol Mandate,” February 2
6, 2015,
http://www.toomey.senate.gov/?p=news&id=1496
(accessed October 2, 2015).
16
Congress s
hould remove preferential treatment for all transportation fuels and technologies.
America needs policies that open access to markets, eliminate preferential treatment for all
energy sources, and reduce the regulatory burden that chokes investment and inno
vation.
The Heritage Fo
undation is the most broadly supported think tank in the United States. During
2014, it had hundreds of thousands of individual, foundation, and corporate supporters
representing every state in the U.S. Its 2014 income came from the following sources:
Indi
viduals 75%
Foundations 12%
Corporations 3%
Program revenue and other income 10%
The top five corporate givers provided The Heritage Foundation with 2% of its 2014 income.
The Heritage Foundation’s books are audited annually by the national accounting firm
of RSM
US, LLP.
Members of The Heritage Foundation staff testify as individuals discussing their own
independent research. The views expressed are their own and do not reflect an institutional
position for The Heritage Foundation or its board of trustees.
Nicolas (Nick) Loris, an economist, focuses on energy, environmental and regulatory issues as the
Herbert and Joyce Morgan fellow at The Heritage Foundation.
A senior policy analyst in Heritage's Roe Institute for Economic Polic
y Studies, Loris researches and
writes about energy supplies, energy prices and other economic effects of environmental policies and
regulations, including climate change legislation, energy efficiency mandates and energy subsidies. He
covers coal, oil, na
tural gas, nuclear gas and renewable energy policy and articulates the benefits of free
market environmentalism.
Loris has testified before House and Senate committees. He has been published and quoted in
publications such as The Wall Street Journal and T
he New York Times. His radio and television
appearances include CNN, Fox News Channel, MSNBC and National Public Radio. He is a prolific
contributor to the energy and environment section of The Daily Signal.
Loris, a senior policy analyst since 2013, was named Morgan fellow the year before. The fellowship was
endowed by retired real estate developer Herbert Morgan and his late wife, Joyce, of Arlington, Va.,
longtime proponents of free enterprise and limited g
overnment.
Before joining Heritage in 2007, Loris was an associate at the Charles G. Koch Charitable Foundation,
immersing himself for a year in a market
-
based management program.
He received his master's degree in economics from George Mason University
in Fairfax, Va. He holds a
bachelor's degree in economics, finance and political science from Albright College in Reading, Pa.
Loris, who was born and grew up in Quakertown, Pa., currently resides Washington, D.C.

[Hamloc]

Chuck2 why can't you just answer the question yourself?

[Hamloc]

Chuck2, interesting quote from above"Having politicians centrally plan energy decisions best left to the private sector distorts markets and demonstrates the high costs and unintended consequences of government control". This is a very important point, even though in this article it is targeted at biofuels, you could very easily substitute electricity. Ontario's electricity debacle is a prime example of the truth of this quote being applied. As I said above whenever government involves itself in directing business success we pay one way or another. Have a good day:-)

[chuckChuck]

The renewable fuel standard creates an artificial market for corn and oil seeds that benefits farmers.

Bio-fuel is pitched as environmentally friendly with reduced emissions which is questionable.

Wind energy is competitive with natural gas for producing electricity without subsidies. Many renewable energy sources will eventually be cheaper and a better investment. Hydro already is. Saskatchewan and Alberta are both investing in green energy. Why don't you ask Sask Power and Brad Wall why?

Many industries get incentives, and subsidies including agriculture.

Why do farmers think they are so different considering they get subsidies as well?

[Hopalong]

Farmers For Action sounds like some of our own left wing action groups, especially part about anti-corporate profit agenda.
Our civilization is based on trade and specialization in what we each do.
Doubt we are going back to primative life style unless forced to.