RFS Bill Introduced

Measure Would Strip Corn Ethanol From RFS

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Legislation introduced in the U.S. Senate Thursday would eliminate corn ethanol from the Renewable Fuel Standard. (DTN file photo by Elaine Shein)

OMAHA (DTN) -- Even a decade ago when cellulosic ethanol was always seemingly five years away from reality, the corn-ethanol industry was seen as a necessary bridge toward commercialization of unproven advanced ethanol technologies. Ethanol industry officials said that's why they oppose legislation introduced in the U.S. Senate Thursday to strip corn ethanol from the Renewable Fuel Standard.

Sens. Pat Toomey, R-Pa., and Dianne Feinstein, D-Calif., introduced the Corn Ethanol Mandate Elimination Act of 2015, which they say will clear the way for advanced biofuels market expansion.

In a news release announcing the bill Thursday, Toomey and Feinstein cited numerous reasons for the legislation, including many reasons consistently repeated for years by opponents of the ethanol industry: that ethanol is driving up food prices, damages engines, drives up gasoline prices and is harmful to the environment. The bill's introduction coincides with a Washington, D.C., visit by 10 National Council of Chain Restaurants executives this week to support the bill.

During a news conference Thursday, ethanol and advanced biofuels industry representatives said many of the reasons cited for the bill already have proven to be untrue. For instance, the price of food has not come down even though corn prices have fallen from a high of about $8 a bushel in the past seven years to now below $4 a bushel -- about the price of corn when the 2007 RFS became law. In addition, ethanol has remained largely priced below gasoline even as oil prices have fallen to less than $50 per barrel in recent months.

The ethanol industry responded two ways Thursday: by expressing public opposition to the bill and by writing a letter to President Barack Obama to urge for an administrative fix to the RFS. Ethanol industry representatives say the law is not in need of reform, but rather needs a change in how the U.S. Environmental Protection Agency implements the law.

"The bill introduced today is a misguided solution in search of a problem," said Bob Dinneen, Renewable Fuels Association president and chief executive officer. "... The whole notion that it is a corn-ethanol mandate is wrong. There is no specific requirement for corn ethanol. The whole foundation of the legislation is wrong."

Essentially, the RFS caps corn-ethanol's portion of the renewable fuel mix at 15 billion gallons. That means ethanol producers could produce above 15 billion gallons as a whole if there is a market for the fuel. Ethanol produced beyond 15 billion gallons would not count toward the total RFS volumes.

Keith Alverson, a South Dakota farmer and a member of the National Corn Growers Association board of directors, said ethanol opponents don't seem to be aware that farmers continue to become more efficient.

"This is something that is disappointing that we need to talk about time after time," he said during the news conference. "... We've doubled our corn production in the last 30 years. We have more corn available for other uses today than we had before the RFS. The efficiency of corn farmers is incredibly important because those who have opposed ethanol haven't updated their talking points."

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INCREASED GHG EMISSIONS

Brent Erickson, executive vice president of industrial and environmental of the industrial and environmental section at the Biotechnology Industry Organization, or BIO, said removing corn ethanol from the RFS would lead to increased greenhouse gas emissions.

"The bill is a misguided piece of legislation," he said. "It is simplistic and its unintended consequences are that it will cause an increase in GHG emissions by 92 million metric tons of CO2 by causing a switch to fossil fuels. It would encourage oil companies to replace ethanol with more petroleum products."

As already has been the case when it comes to doubts about the future of the RFS, Erickson said the legislation would shrink the overall biofuels market and would "chill additional investment" in advanced biofuels.

"You really can't separate or de-link corn ethanol from cellulosic ethanol facilities," he said. "These things work in tandem very well."

RFA's Dinneen said Congress is "highly unlikely" to pass the bill. "But you never know," he said. "The fundamental mathematics of energy policy on Capitol Hill haven't changed."

Sen. Feinstein said in a news release Thursday the corn ethanol portion of the RFS was causing trouble for consumers.

"The federal mandate for corn ethanol is both unwise and unworkable," she said. "Our bill addresses that with a simple, smart modification to the Renewable Fuel Standard program. A significant amount of U.S. corn is currently used for fuel. If the mandate continues to expand toward full implementation, the price of corn will increase. According to the Congressional Budget Office, that would mean as much as $3.5 billion each year in increased food costs. Americans living on the margins simply can't afford that."

Feinstein said U.S. fuel infrastructure has "a ceiling for the amount of corn ethanol that can be used, and we're rapidly approaching it."

LETTER TO PRESIDENT

In a letter to the president this week, the RFA, the Advanced Ethanol Council, Novozymes, DuPont, Association of Equipment Manufacturers, BIO, NCGA, Growth Energy, Archer Daniels Midland and Abengoa Bioenergy, appealed to the administration to fix the implementation of the RFS as part of the president's overall climate goals.

EPA Administrator Gina McCarthy Wednesday said the agency plans to implement three years' worth of RFS volumes for 2014-2016 this spring.

"Our industry implores you to take the same bold measures when it comes to biofuels and protect the integrity of the RFS," the letter stated. "Now that EPA has outlined its timeline, we urge you to direct EPA to craft a new rule that supports growth for existing and new biofuels technologies and lives up to the original intent of the bipartisan law. The RFS is working and has resulted in significant environmental gains.

"... EPA's proposed 2014 rule would have put your climate legacy at risk. If finalized, the rule would have increased the nation's CO2 emissions by 21 million metric tons in 2014 alone, the equivalent of adding 5.5 new coal-fired power plants. Carrying the EPA's proposed approach forward in future years would have triggered even larger increases in climate-altering emissions; by 2022, the cumulative emissions of greenhouse gases would have been nearly 1 billion metric tons higher than would occur if EPA set the RFS at statutory levels."

The groups told the president the previous EPA proposal to cut the overall volumes in the RFS by some 3 billion gallons, "has temporarily frozen investment in the next wave of cellulosic ethanol facilities here at home.

"... Your administration has made commitments to the American people and the international community to pursue ambitious goals over the coming years to reduce our dependence on fossil fuels and combat climate change. We urge you to stay the course and allow the commonsense, bipartisan Renewable Fuel Standard to continue working as intended to create American green energy jobs and promote American innovation."

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

Follow Todd on Twitter @toddneeleyDTN

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Todd Neeley

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