Alcohol haze.

Mr. Bolch is Robert McCallum Professor of Economics and Mr. Lyons is Professor Emeritus at Rhodes College. Their latest book is Apocalypse Not: Science, Economics, and Environmentalism (Cato).

ON APRIL 28 a federal appeals court ruled that the Environmental Protection Agency may not mandate the sale of gasoline mixed with ethanol. Although the Clean Air Act amendments of 1990 empower the EPA to set standards for reformulated gasoline, the EPA overstepped its authority, the court said, by requiring that 30 per cent of such fuel include ethanol.

The ethanol mandate illustrates how environmentalism has become a vehicle for dishing out pork while harming consumers, taxpayers -- and the environment. Although the mandate seems dead for now, it could be revived by Congress, where Senate Majority Leader Robert Dole is a big supporter. The issue will be a test of whether the Republicans are serious about basing environmental policy on sound science.

The Clean Air Act amendments call for the wintertime use of fuels with added oxygen to reduce carbon-monoxide levels. In theory, an "oxygen boost" assists in complete combustion of gasoline. These reformulated fuels are to be used in 10 cities and in portions of 14 states.

The petroleum industry's principal response to the oxygenation requirements was to use methyl tertiary butyl ether (MTBE), an additive made from methanol that was already in wide use as an octane enhancer in place of lead. By 1994 the petroleum industry had significantly increased its production of MTBE, from about 10.9 billion pounds in 1992 to about 24 billion pounds in 1993. But MTBE has an odor that many people find offensive, and there are unresolved questions about its possible health effects. In Fairbanks, Alaska, high MTBE levels were found in the blood of people who reported headaches, nausea, and throat and eye irritations, prompting Governor Walter J. Hickel to request an EPA exemption from the use of MTBE.

Ethanol, however, does not seem to be a promising substitute. The reaction of volatile organic compounds, nitrogen oxides, and sunlight is a major cause of smog. Organic compounds are considerably more volatile in gasoline mixed with ethanol than in gasoline mixed with MTBE. Furthermore, ethanol use in automobiles produces acetaldehyde, a precursor to PAN (peroxyacetyl nitrate), which is known to be harmful to plants, as well as a probable cause of cancer. One of the highest PAN levels in the world occurs in Rio de Janeiro because of Brazil's push to use ethanol in automobiles.

But surely the harmful environmental consequences of oxygenated fuels are outweighed by their usefulness in reducing carbon-monoxide levels? Unfortunately, they don't seem to be doing so. In April 1993, Chemical and Engineering News reported research by a team at the University of Colorado, Denver, on the effects of using oxygenated fuels in Colorado's Front Range area. The oxygenated-fuels program is estimated to have cost the drivers in this area, which includes Denver, Colorado Springs, and Fort Collins, $14 million a year in higher fuel prices alone. Carbon-monoxide levels have fallen, but when a careful statistical analysis takes into account the fact that the automobile stock over the peroid studied changed to one with cleaner-burning engines, the carbon-monoxide drop that can be attributed to oxygenated fuels becomes statistically insignificant. Ambient carbon-monoxide levels had begun to fall well before the use of oxygenated fuels. Thus the TV ads of Archer Daniels Midland (the major producer of ethanol in the United States) hyping the wonders of ethanol in the Denver area should be heavily discounted.

Furthermore, the data suggest that the use of oxygenated fuels may have increased the ambient levels of formaldehyde (a known carcinogen produced by MTBE) in the Front Range area. Data from Albuquerque indicate an increase of atmospheric organic acids because of the use of ethanol. The University of Colorado report agreed with a 1992 report by the Colorado legislature that found "limited benefits" from the use of oxygenated fuels.

In short, there is little evidence that the oxygenated-fuels program is doing any environmental good, or that ethanol is superior to MTBE. To date, the main effects of the oxygenated-fuels program have been increases in taxes, in the cost of gasoline, and in noxious pollutants.

BUT ethanol has one politically positive attribute: it can be used to subsidize farms. The leading defenders of the ethanol mandate in the Senate, where an attempt to derail it failed last year, are from the Midwest or have logrolling obligations to the grain-producing states. (The mandate went so far as to specify that the ethanol was to be made from nothing but grain, even though ethanol made from water and ethylene in a refinery is chemically identical and can be produced at a fraction of the cost.) Last year's debate was nonpartisan, with Democrats Bill Bradley (N.J.) and J. Bennett Johnston (La.) leading the opposition. Bradley opposed the mandate on environmental and economic grounds, pointing out that ethanol already enjoys a 54-cent-per-gallon subsidy and that the mandate would cost consumers hundreds of millions of dollars a year. A. B. Early, environmental-quality program director for the Sierra Club, argued that the mandate would increase the potential for smog and air toxins.

The voting ended in a tie, with Vice President Albert Gore casting the decisive vote in favor of the ethanol requirement. Ethanol boosters like Mr. Gore and Senator Dole argue that it is a renewable resource and that it releases less carbon dioxide (a "greenhouse gas") into the environment than does gasoline. But since the days when ethanol was touted as a solution to the "energy crisis," many scientists have noted that grain-based ethanol actually consumes more energy than it produces, once you take into account the energy used to make and transport fertilizer and other chemicals, till the soil, harvest the grain, convert the grain to sugar, distill the dilute alcohol resulting from fermentation, and so on. A similar analysis of the total production process refutes the idea that overall carbon-dioxide emissions are lower with ethanol than with gasoline.

There is one clearly renewable aspect to the ethanol mandate: it would create a demand among grain growers and ethanol processors for its own perpetual renewal. But surely there are less expensive ways to subsidize the ethanol lobby.