Groups: End Corn-Based Ethanol Mandate

STREATOR, Ill. (DTN) -- Corn ethanol production is squeezing out production of advanced biofuels, is more polluting to the environment than gasoline, drives up the cost of food and feed, and should be phased out, according to testimony before a House subcommittee Wednesday afternoon exploring stakeholder impact of the Renewable Fuel Standard.

"The rapid expansion of corn ethanol production has increased greenhouse gas emissions, worsened air and water pollution, and driven up the price of food and feed," said Scott Faber, senior vice president for governmental affairs, the Environmental Working Group, a Washington, D.C., based non-profit advocacy group specializing in issues related to public health and the environment.

"By contrast, some second-generation biofuels could significantly reduce greenhouse gas emissions without creating new environmental challenges or increasing food prices."

Faber added that "so long as corn ethanol saturates the marketplace for ethanol, there will be little incentive to develop these promising new fuels. To allow second-generation fuels to gain a foothold, Congress must reform the RFS to phase out the corn-based ethanol mandate."

The hearing concluded a two-day process hosted by the House Subcommittee on Energy and Power seeking testimony from stakeholders affected by the RFS. The RFS, part of the Clean Air Act, was introduced in 2005 and amended in 2007. It is administered by the Environmental Protection Agency. It requires higher levels of renewables to be blended each year into petroleum-based fuels through 2022 when it reaches 36 billion gallons.

Corn-based ethanol was viewed as a stepping stone to more advanced renewables when the mandate was created. The RFS caps corn-based ethanol in 2015 at 15 billion gallons as a result. This year the carve-out for renewable biofuel is 13.8 billion gallons, increasing to 14.4 billion gallons in 2014.

Others testifying had similar opinions, such as William Roenigk, representing the National Chicken Council, who believes the marketplace should determine demand for renewable fuels.

"We are not anti-ethanol," Roenigk said. "Rather, we believe the government should stand aside and permit the market to move the United States toward greater energy independence."

Representing the National Association of chain restaurants, Ed Anderson said the RFS costs "up to $30,000 per restaurant," and he is asking for the outright repeal of the RFS.

Chris Hurt, professor of agricultural economics at Purdue University, testified that there are two factors driving up the cost of grains: the RFS and increased demand for oilseed crops from China.

"RFS2 has increased the use of corn for ethanol production and to a smaller extent the use of soybean oil for biodiesel," Hurt said. "The second [driver] is often overlooked in the discussion of the impacts of the RFS and that is the tremendous increase in the exports of soybeans to China."

He said corn usage in the U.S. to meet ethanol needs went from 7.8 million acres in 2005 to 24 million by 2010, a 16-million-acre surge in demand. For soybeans headed to China, U.S. land used to grow these beans surged 12.8 million acres from 8.3 million acres in 2005 to 21.1 million acres in 2010.

"Demand surges of this magnitude were beyond the ability of supply to keep up and prices rose for these high-demand crops," Hurt said.

He said the RFS was a primary contributor to the demand surges, representing roughly 55% of the new demand.

He said the RFS has also contributed to increases in farm income. Typical Midwestern farmland saw ownership returns move from $115 an acre in 2005 to $300 an acre in 2010, 2011 and 2012. Farmland also increased in value, nearly tripling in value from 2005 to 2013.

Meantime, Pam Johnson of the National Corn Growers Association asserted that the RFS has successfully displaced demand for foreign oil and decreased the cost of gasoline while decreasing greenhouse gas. She countered other testimony saying studies show increased efficiency in farming and decreased GHGs from ethanol compared to gasoline.

"The RFS is not only one of our best options to substantially reduce greenhouse gas emissions from the transportation sector but is also a critically important component to the development of new technologies," she said.

Myke Feinman can be reached at myke.feinman@telventdtn.com

(BM/AG)

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