RFS Bills Introduced

OMAHA (DTN) -- In what may be the first salvo in a 2015 battle on the future of the Renewable Fuel Standard, Rep. Bob Goodlatte, R-Va., introduced two bills Wednesday -- one to eliminate the RFS and a second that would reform the law that has sparked a rural economic revival in the past decade.

The proposal to eliminate the RFS already has 38 cosponsors in the U.S. House of Representatives, according to a news release from Goodlatte. The second bill would cap corn ethanol's portion of the RFS at 10%, effectively limiting ethanol's market to the current E10 blend wall.

Goodlatte's measures are the first in what is expected to be an ongoing offensive against the RFS this year, and at some point may test President Barack Obama's support for ethanol and biofuels by sending a reform or repeal bill to his desk.

The U.S. Environmental Protection Agency said this week it intends to finalize RFS volumes for 2014, 2015 and 2016 by spring, as the ethanol industry continues to be productive and the biodiesel industry is in shutdown mode.

Goodlatte called the ethanol mandate in the RFS a "true kitchen table issue" that is an "unworkable policy" that "impacts every American family trying to make financial decisions. From food costs to wear and tear on the family car or lawnmower, the RFS means added costs and less money for other purchases.

"It certainly impacts the cost of doing business for many, but it's the consumers who ultimately shoulder the costs of this broken policy."

Ethanol industry representatives say Goodlatte's statement contradicts what is happening in the real world and his position amounts to nothing more than a political payback to the oil industry.

CONSUMERS HARMED

Tom Buis, chief executive officer of Growth Energy, said the pieces of legislation would harm consumers.

"This bill does nothing to address the critical policy goal of achieving U.S. energy independence, nor will it lower the price of food as the bill authors claim," he said. "Instead, it is a gift to special interest groups who are only concerned with maintaining their record profits. The RFS reform act is nothing more than a way for big oil to prevent market access to a higher octane, price competitive product, such as E15...

"This proposal is also a gift to big food in their effort to extend their record profitability by blaming ethanol for food price increases. For the past two years, American farmers have produced record corn crops while receiving market prices that are now below their cost of production. This has provided an economic boon to the integrated U.S. livestock and chain restaurant industries that tout their profitability to their stakeholders while consumer food prices, led by the meat sector, continue to escalate."

Bob Dinneen, president and chief executive officer of the Renewable Fuels Association, said Goodlatte's attempts to change the RFS are based on arguments that have been proven to be false.

"As a direct result of the RFS, more than $30 billion has been invested in infrastructure and expanded production capacity, creating an industry that is responsible for nearly 400,000 jobs and contributes $44 billion to the GDP," Dinneen said. "Rep. Goodlatte would put all of that at risk to protect big oil's monopoly, sending a dangerous chill through the investment community that will forever more question the government's resolve.

"Moreover, the legislation is predicated on a false premise that the RFS is contributing to increased food and fuel costs when the exact opposite is true. Goodlatte clearly overlooks the fact that ethanol reduces the cost of gasoline at the pump while also contributing more than 39 million metric tons of high-protein animal feed fed to livestock and poultry here and abroad."

FAMILY FARMS HURT

National Farmers Union President Roger Johnson said eliminating the RFS would hurt family farmers who have benefited from an expanded market for corn.

"The elimination of the corn-based ethanol mandate and blend cap will gut the nation's biofuel production, strand existing investment in second-generation biofuel production and hurt family farmers, ranchers and rural communities that have experienced much-needed reinvestment from this policy," he said. "This is not only a bad step for agriculture, but also is a major setback to the environment and our nation's attempts to manage its carbon emissions."

Jeremy Funk, communications director for Americans United for Change, said Goodlatte's bills will increase U.S. reliance on fossil fuels.

"You could safely say there is no bigger cheerleader for big oil in Congress than Bob Goodlatte," Funk said. "This is the same congressman who held a press conference last year shilling for big oil and calling for a repeal of the RFS as cleanup efforts were still underway after an entire tanker's worth of crude oil spilled in his district. What Goodlatte didn't mention was that repealing the RFS would inevitably lead to more dependence on dirty crude oil and more spills and oil-industry related disasters like that in Lynchburg."

RFS SYSTEM BROKEN

Environmental Working Group policy analyst Mike Lavender said his group supports the measure to reform the RFS.

"To date, the Renewable Fuel Standard has failed to deliver on its promise of environmentally friendly biofuels, leaving our air and water at risk," Lavender said. "According to EPA's own analysis, corn ethanol results in more greenhouse gas emissions than gasoline. Additionally, the EPA's inspector general has concluded that the Renewable Fuel Standard is a significant cause of water pollution in the Mississippi River Basin and Gulf of Mexico.

"The Renewable Fuel Standard Reform Act is the logical next step to reduce the harm that corn ethanol does to our environment, while simultaneously making space for truly green biofuels that lower greenhouse gas emissions."

The National Chicken Council said the legislation is needed to fix what it says is a "broken" RFS system.

NCC President Mike Brown said the RFS has hurt the chicken industry. "Since the RFS was enacted, chicken producers alone have incurred almost $50 billion in cumulative additional feed costs," he said. "The RFS is a mess, and NCC will support measures such as this to fix it. ...The problem with the RFS is that it mandates the use of corn for ethanol, regardless of what makes economic sense, regardless of who is hurt and regardless of what it costs. ...The RFS has chicken producers coming and going -- high oil prices drive up the price of corn, low oil prices drive up the use of corn."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow Todd on Twitter @toddneeleyDTN

(CZ/AG)

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