The energy revolution, brought about by advances in technology, hydraulic fracturing and horizontal drilling, is weakening OPECís influence. Our imports have dropped to 35 percent. Increased non-OPEC production is putting downward pressure on prices. Diversity of supply and avoiding unreasonable restrictions on production are the best ways to enhance energy security.
The final mandate justification was to achieve lower CO2 emissions. That has been disproved by life-cycle analyses of ethanol production showing either no effect or a negative one from planting and harvesting emissions. There could be a positive benefit from advanced biofuels, if the technology becomes commercially viable.
RFS proponents overlook the decline in U.S. carbon dioxide emissions resulting from lower gasoline demand and more fuel-efficient vehicles. The Energy Information Administration projects that emissions will not return to 2005 levels before 2035. Our emission reductions will be swamped by increased emissions from emerging economies. One analysis, using an accepted climate model, concluded that reducing our emissions by more than 50 percent would reduce global temperature by no more than 0.1 degree in 2100.
The lesson to be learned from the RFS mandate and industrial policy initiatives is that any policy that ignores economic, energy and technology realities will fail. The beneficiaries of the RFS mandate are political entrepreneurs, seeking profit in the political marketplace by gaming the legislative and regulatory system.
William OíKeefe is the CEO of the George C. Marshall Institute and president of Solutions Consulting. He is formerly chief operating officer of the American Petroleum Institute.