Ag Policy Blog
Corn Ethanol Target of Keystone Amendment
Until Friday the U.S. ethanol industry took virtually no interest in the debate about whether the Keystone XL pipeline should be built across a number of Northern Plains states including Nebraska.
As the amendments process gets fired up in the U.S. Senate ahead of a vote on legislation to build the pipeline, however, one particular amendment caught the attention of the ethanol industry.
Sens. Dianne Feinstein, D-Calif., Pat Toomey, R-Pa., and Jeff Flake, R-Ariz., are attempting to attach an amendment to the Keystone measure that would remove corn ethanol from the Renewable Fuel Standard. It is believed potential legislation to either reform or eliminate the RFS altogether could come before Congress this year.
As part of the amendment the senators make a number of claims about the corn-ethanol industry.
Bob Dinneen, president and chief executive officer of the Renewable Fuels Association, said in a statement Friday the amendment is without merit.
"The Feinstein/Toomey amendment is founded upon a false premise," Dinneen said. "The sponsors claim the so-called corn ethanol mandate drives up the price of corn, food, and gas. The fact of the matter is that corn is less expensive today than when the RFS was passed in 2007. There is simply no truth to the notion that ethanol has driven up the price of food. In fact, the UN concluded that food prices are driven more by the price of energy than the cost of commodities. To that point, ethanol has been less expensive than gas for the better part of the past four years and has helped reduce consumer pain at the pump.
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"This amendment is an unnecessary solution to an imaginary problem. If approved, it would set our nation's energy, economic, and climate agenda back decades."
Tom Buis, chief executive officer of Growth Energy said in a statement that senators are trying to accomplish something in the amendment process they were unable to do through previous legislation.
"This legislation is incredibly shortsighted," Buis said. "Nearly identical legislation has been introduced in the past and has always failed to gain any traction since a majority of senators understand the importance of homegrown American renewable fuels. This amendment would eviscerate the RFS -- the most successful energy policy enacted in the last 40 years. It will continue to keep us addicted to foreign oil and more than anything, it seems like this legislation is appeasing the wishes of big oil and big food.
"Additionally, this legislation is based on false, misleading information. To blame ethanol for an increase in the price of food may make for good rhetoric, but it is completely devoid of any facts to back it up. Corn ethanol is not the cause of high prices; it is the price of oil."
Buis said even the World Bank pointed out that crude oil prices are responsible for more than 50% of the increase in food prices since 2004.
"Countess studies have shown that oil prices, Wall Street speculators and the high costs of manufacturing, packaging and transportation are the true culprits driving up food prices," Buis said. "Furthermore, 2014 yielded a record corn crop and the price of corn dropped precipitously throughout the harvest, even as food costs increased. The authors of this legislation fail to understand the actual process of how ethanol is produced. Only the starch is removed, while all of the valuable components – the fiber, oil and protein is returned to the food chain in the form of a high protein animal feed."
Buis pointed to corn ethanol's "environmental benefits" outlined in an Argonne National Laboratory study that found ethanol reduces greenhouse gas emissions by an average of 34% compared to gasoline. "Advanced biofuels like cellulosic ethanol have the potential to reduce greenhouse gas emissions by over 100 percent in comparison to gasoline," he said.
"...It appears to me, this legislation is nothing more than a concession to demands of big oil and big food, who care more about their own bottom line, than the American consumer," Buis said. "Furthermore, this is a slap in the face to consumers who deserve a choice and savings when they go to fill up at the pump."
Feinstein said in a statement the amendment presents an opportunity to focus the RFS on advanced biofuels.
"The federal mandate for corn ethanol is both unwise and unworkable," she said. "Roughly 40% of corn in the United States is currently used for fuel, which increases the price of food and animal feed while also damaging the environment. Additionally, oil companies are unable to blend more corn ethanol into gasoline without causing problems for some gas stations and older automobiles.
"This bill is a simple and smart modification of the Renewable Fuel Standard program. Once we remove the corn ethanol mandate, the RFS program can finally serve its intended purpose: to support the development of advanced, environmentally friendly biofuels like biodiesel, cellulosic ethanol and other revolutionary fuels."
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