OMAHA (DTN) --- While members of Congress do a "point-counterpoint" behind the scenes on potential energy legislation, agriculture finds itself divided as key livestock groups such as the National Cattlemen's Beef Association find themselves more aligned with ethanol critics than supporters.
Congress returns from a two-week break next week with Democratic leaders wanting to complete an energy bill before they finish for the year.
NCBA has felt some heat because the group has raised questions about the expansion of ethanol and the impact on the market of subsidies such as the 51-cent blenders' tax credit. Such rifts are getting more attention as Congress works to wrap up the energy bill.
"We have been called selfish and all kinds of names throughout this process for simply asking questions, which is a little bit frustrating," said Jay Truitt, a lobbyist for NCBA. "We just didn't think people needed to keep stomping on the gas pedal to keep this industry going."
Congress returns from a two-week break next week with Democratic leaders wanting to complete an energy bill before they finish for the year. It appears certain a higher renewable fuels standard will occur, but debate still centers on the exact figure. The Senate was proposing 36 billion gallons by 2022, while the House was looking at 20.5 billion gallons by 2015, even though the House initially did not have an increased RFS in its energy bill earlier this year. There also are differing figures on how much increased ethanol would come from corn versus new technologies such as cellulosic ethanol.
The National Corn Growers Association has issued an "action alert," asking its members to urge their congressmen and senators to support legislation that would ensure 15 billion gallons of ethanol annually come from corn by 2015.
"It is imperative that members of Congress know the importance of an expanded RFS," NCGA President Ron Litterer said in a statement. "As the energy bill continues to move forward, we need to ensure that our voices are heard loud and clear."
Sen. Charles Grassley, R-Iowa, a major ethanol backer in Congress, told reporters Tuesday one of the greatest dangers facing ethanol is the divide in agriculture that has come to light this year.
"I think there is a short-term view by some in agriculture that they are going to regret," Grassley said.
Nearly a year ago at NCBA's annual convention, ethanol became the overwhelming topic among cattle producers, who raised more questions about issues such as the mandated 7.5-billion-gallon RFS and the 51-cent blenders' tax credit after seeing the jump in feed prices last harvest. The overriding question became: When should the subsidies end and the marketplace take over? Given the price increases in grain from current ethanol production, livestock producers such as cattle feeders have a direct interest in the impact felt from a higher RFS, Truitt said.
"Our message points on ethanol have not been negative," Truitt said. "But it clearly makes the cost of feeding cattle higher."
Livestock groups have sought a "safety valve" in the energy bill that would kick in and stem any further boosts in an RFS when grain prices hit a certain high or stocks dip too low. Such safety valves are not being discussed as Senate and House members conference over the energy bill.
"I don't think we have ever asked them to kill any of this," Truitt said. "We recognize there is a tremendous amount of support in Congress for raising the RFS."
Still, one proposal would establish periodic studies by the National Academy of Sciences on the impact of ethanol on consumers, the environment and other areas of the economy. The National Petrochemical and Refiners Association, which has been a long-time critic of ethanol, stated Tuesday that the group opposed any higher fuel mandates and complained about the proposal for studies coming after higher mandates.
"The new House language puts the cart before the horse by requiring a new study of the impacts of increasing the renewable fuels mandate after the increase has already been implemented, and by establishing mandates for fuels that do not even exist for commercial use, such as cellulosic ethanol and biomass-based diesel," stated Charles Drevna, executive vice president of the refiners' group.
The American Farm Bureau Federation backs the energy bill and in particular supports increasing the RFS, said Mary Kay Thatcher, a lobbyist for the AFBF. Still, Thatcher said the bill will have a strong emphasis on cellulosic ethanol and wind energy, which could aid livestock producers more than grain farmers.
"I think we would say increasing the RFS is the most important thing in the bill, but it has to be well-rounded and have something for everybody," she said.
Lawmakers continue tinkering with the language on the RFS. More work is being put into a higher biodiesel standard, which could actually help livestock producers because the use of animal fat in biodiesel looks promising.
In addition to the fight over a higher RFS, work also continues on the corporate average fuel economy, known as "CAFE standards." Lawmakers, particularly in Michigan, had opposed stringent increases in fuel economy, which held up the conference talks. Now, lawmakers are negotiating on a reasonable figure for per-gallon fuel economy.
Another proposal being offered is a "soft-cap purchase" for gasoline blenders who cannot get ethanol, but who still face a mandated use. Rather than pay for ethanol, those companies would buy credits from the federal government, which in essence becomes a revenue raiser for the Treasury but may not spur more ethanol development.
Lawmakers also have disputes about whether to keep oversight of the RFS standards in the Environmental Protection Agency or move authority to the Department of Energy. The turf battle may be as much over which congressional committees would have oversight as it is over which agency would control the regulations.
Chris Clayton can be reached at chris.clayton@dtn.com
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