President Trump’s Environmental Protection Agency took a step toward draining the swamp by curbing the amount of corn ethanol being forced into our economy by the crony capitalist ethanol mandate.
Big Corn is exploding with shock and dismay, as are corn-friendly lawmakers. But the White House shouldn’t heed the objections of these subsidized corporate moonshiners. Instead, he should lean on Congress to go further and reduce the ethanol mandate to zero.
Ethanol is a fuel alcohol derived from plants, in this country mostly from corn. Without federal support, there would be a very small market for ethanol, which is less powerful than gasoline, typically more expensive, cannot be shipped by pipeline, and tends to corrode engines.
The federal renewable fuel standard, also known as the RFS and the ethanol mandate, is King Corn’s current gravy train. The mandate requires refineries to blend a certain amount of ethanol into their gasoline. The EPA has some leeway on this score, and the agency has used it to protect consumers rather than the ethanol lobby.
The fuel standard requires at least 15 billion gallons of “conventional biofuels,” basically corn ethanol, for 2020. The ethanol lobby wanted the Trump administration to require more ethanol than even the law requires. Trump’s EPA further infuriated the industry by issuing exemptions for small refineries, which often struggle to get their hands on the amounts of ethanol required to meet the mandates.
The corn lobby angrily denounces these exemptions as “small refinery bailouts,” in the words of Geoff Cooper, president of the Renewable Fuels Association. Consider for a moment the perverse sense of entitlement here. An organization representing for-profit businesses, firms engaged in enterprise and supposedly proud of their product, calls it a "bailout" when a potential customer is granted limited freedom to not buy their product.
This is how crony capitalism not only distorts the economy and corrupts our politics (watch the Democratic presidential candidates bow before the altar of ethanol in Iowa these days), but how it also corrupts our businesses.
We understand that some of ethanol's biggest champions are powerful. We understand that Trump's political allies include some ethanol hustlers. And we understand the desire to help farmers, especially at a moment when tariffs are unfairly hurting them.
But if Trump cares about the economy, and about draining the swamp, he will not give into King Corn's demands. In fact, he should go in the other direction.
Trump should call on his friends in Congress to kill the ethanol mandate. Pass and sign a law winding the mandate down from its 15 billion gallons down to zero gallons in 2025. At the same time, scrap the mandate for "advanced" biofuels. If these fuels are so great, then consumers will buy them without a mandate.