Ethanol Mandate: Bad For The Economy, Bad For The Environment

By Sarah Montalbano, Minnesota Reformer

December 30, 2025

Minnesotans pride themselves on their responsible stewardship of the environment. Minnesota’s ethanol mandate, on the books for more than two decades, works against that.

All gasoline sold in Minnesota must contain at least 10% ethanol, a fuel made from fermenting sugars from plants like corn. In 2003, ours was the first state to mandate that every gas station sells E10 blends. The federal renewable fuel standard, or RFS, followed in 2005, requiring a certain volume of ethanol and other renewable fuels be blended into U.S. gasoline supplies, setting annual volume targets. Ethanol now accounts for nearly 45% of total corn use.

This competing use of corn has raised its price, increasing the cost of food used as livestock feed. The Congressional Budget Office estimates that demand for ethanol has raised Americans’ total food spending by 0.8 to 2%. Another estimate suggests that corn prices were 30% greater between 2006 and 2011 as a result of the RFS mandate. As corn becomes more lucrative for farmers — and corn farms received $3.2 billion, or 30.5% of all federal farm subsidies in 2024 — cropland is diverted from other crops and livestock, raising prices for all crops.

Ethanol mandates increase prices at the pump as well. The federal RFS adds about 30 cents per gallon to the wholesale cost of gas, on average. Consumers pay more for each gallon and use more gas because of ethanol’s lower energy content, which leads to about 3% lower fuel efficiency for E10.

These higher prices might be justified if there was some environmental benefit, but there isn’t. Indeed, ethanol may increase carbon emissions. Ethanol production requires feedstock, the fertilizers used during growing, the fuel and energy used during refining, the milling process, and increased land use for corn, all of which generate carbon emissions.

A 2022 study concluded that RFS expanded U.S. corn cultivation by 8.7% between 2008 and 2016 and suggests that ethanol’s carbon intensity is likely “at least 24% higher” than gasoline after accounting for land use changes.

Once indirect land-use effects are considered, ethanol can have twice the greenhouse gas emissions as gasoline. A 2015 study suggests that the RFS’ overreliance on corn ethanol has resulted in “unmet targets for cutting air pollution, water contamination and soil erosion.” Another study points out that that emissions from burning ethanol contain more ozone precursors than emissions from gasoline, with adverse respiratory health effects when released at ground level. Ethanol also demands water, uses fertilizers that leech nitrogen into surrounding waterways, and encourages unsustainable land management practices that lead to soil erosion.

None of this is the fault of Minnesota farmers, who operate under the incentives that the state and federal government have put into place.

Policymakers in St. Paul and Washington, D.C., bear the responsibility of fixing these incentives.

As a great man once said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”

The Minnesota Reformer is an independent, nonprofit news organization dedicated to keeping Minnesotans informed and unearthing stories other outlets can’t or won’t tell..