A recent Environmental Protection Agency announcement that corn-based ethanol achieves a 21 percent greenhouse gas reduction compared to gasoline is based on false accounting assumptions and could actually lead to more fossil fuel consumption, according to Cornell University economists whose research will be released in March in the journal Applied Economics Perspectives and Policy.
Harry de Gorter and David Just, professors of applied economics and management at Cornell, note that EPA's calculations assume, for example, that every gallon of ethanol produced will result in a gallon of gasoline that will not be burned.
"It's just a flawed concept. It makes no sense," Just said in a statement. "Most of that 'saved' gasoline will likely be burned somewhere else with potentially dirtier technology, such as China."
The pair also criticizes the subsidy and mandate program. "By having both an ethanol subsidy and a mandate for its consumption, the government will increase global fuel supply, and the subsidy will actually subsidize oil consumption," de Gorter explained. "A more effective policy would have a mandate alone and get rid of taxpayer funded subsidies."