Among its findings, the report notes that “Renewable fuel production and consumption have grown dramatically. Dependence on petroleum—particularly imports—is down significantly. Greenhouse gas emissions from the transportation sector have fallen. The value of agricultural products is up appreciably. And communities across the country have benefited from the job creation, increased tax revenue, and heightened household income that stem from the construction and operation of a biorefinery.”
“The RFS was always intended to be a marathon and not a sprint. Results were never intended to come overnight, but over the past seven years America has reaped vast economic, environmental, and national security benefits due to the increased use of home-grown, renewable fuels,” noted RFA president and CEO Bob Dinneen. “The only hiccup in the unprecedented success of the program is a consequence of EPA’s recent failure to implement the program as designed by Congress. As we blow out the candle on the RFS’ seventh birthday cake, we do so with a wish that EPA would quickly restore the RFS to a trajectory that will enable continued investment in advanced biofuels, drive the market beyond the blend wall, and provide consumers with meaningful options and savings at the pump.”
The report was produced after several meetings during the year with an advisory group that consisted of 23 members, seven of which were oil companies representatives. Only five members of the group represented agriculture or advanced biofuels and biodiesel producers. The rest were a mix of academia (2), big business (4) with two of those representing Toyota, environmental groups (2), and policy organizations (3).
Both of the agriculture representatives were from the National Farmers Union (NFU), president Roger Johnson and vice president of programs Chandler Goule. “It was very important that agriculture that supports the renewable fuels industry be present at the table,” said Goule, who said the meetings were held in a very professional manner. “The problem with the meetings is that they were heavily skewed toward big oil.”
The report concluded that improvements to the RFS are needed, but did not recommend actual repeal of the law. Goule says NFU has major objections to two of the policy recommendations made in the report. “The flattening of the total renewable fuel mandate at its current level going forward, but continuing to increase the three advanced categories, we have significant concerns about what that would to do ethanol and biodiesel,” he said. “Even more concerning was removing the total renewable fuel mandate and only mandating the three advanced categories. Basically what they are doing is giving in to Big Oil’s conclusion that a blend wall exists, which it does not.”
As we wait (and wait and wait and wait) for the U.S Environmental Protection Agency’s (EPA) decision regarding the amount of ethanol and biodiesel to be mixed into the nation’s fuel supply, one group is taking the time to debunk some myths that might be giving the EPA a reason to hesitate. Media Matters has issued a report debunking the “food-versus-fuel” myth, along with several possible Renewable Fuel Standard-stopping myths.
MYTH: Renewable Fuel Standards Raise Food Prices…
FACT: Ethanol Production Does Not Divert Food Or Raise Prices
CBO Report: RFS Will Not Significantly Alter Food Prices. The Congressional Budget Office (CBO) analyzed how the RFS will impact the economy beyond 2014 and determined that it will have no significant impact on food prices. The CBO also stated that if the standards were increased to meet the initially proposed requirements by 2017, it would result in increased spending on food by just one-quarter of 1 percent…
MYTH: Ethanol Will Harm Your Vehicle…
FACT: Rigorous Studies Show That Ethanol Does Not Harm Engines
DOE: Industry-Funded Study Claiming Ethanol Hurts Engines Is “Significantly Flawed.” Patrick B. Davis, the manager of the Department of Energy’s Vehicle Technologies Program, published an article critiquing the CRC study that found E15 and E20 (a gasoline blend with 20 percent ethanol) hurt auto engines. The DOE concluded that the study was “significantly flawed” because it did not establish a proper control group and that it cherry-picked vehicles “already known to have durability issues”
The report also presents plenty more facts debunking myths about how ethanol is supposed to actually be bad for the environment and how biofuels are heavily subsidized, among others.
“In 2013, 15 percent of America’s advanced biofuels – 435 million gallons – came from Brazil, delivering at least a 50 percent reduction in emissions compared to gasoline. Slashing the 2014 renewable fuels standard target would have fundamentally threatened both America’s supply of low-carbon fuel and the Obama Administration’s emissions reduction goals.
The Brazilian sugarcane ethanol industry has collaboratively worked with the U.S. to lower emissions through the RFS for over seven years, and while we’re relieved this decision doesn’t roll back environmental gains made over that time, EPA has missed a golden opportunity to increase the volume of cleaner fuel flowing to American drivers.”
Farina went on to say she still encourages the EPA to publish the 2015 RFS targets as soon as possible so advanced biofuel producers have clarity on production targets before the season starts.
Iowa Secretary of Agriculture Bill Northey said while he’s glad the EPA seems to be responding to public sentiment against what was proposed, he’s also worried about the uncertainty the renewable fuels industry in the state face:
“The past year has been an exciting time in the renewable fuels industry with the first commercial scale cellulosic ethanol plants coming online. However, we have missed opportunities for even more growth in the industry due to the uncertainty created by EPA’s initial RFS proposal. Hopefully the withdrawal of this rule signals a larger change in course within EPA where they will be less adversarial and more responsive to the concerns of rural America.”
Grant Kimberley, executive director of the Iowa Biodiesel Board, is also optimistic the delay means the proposal will be revised more favorably to his group’s fuel, he shares Northey’s concerns over uncertainty:
“An increased RVO for biomass-based diesel would mean good news for Iowa, the number one biodiesel-producing state. Uncertainty has hurt the biodiesel industry and created a ripple effect through the farming community, major ag suppliers and equipment companies. But the EPA has the chance to reverse this.
“The Proposed Rule as it stood would have taken biodiesel backwards from the volumes produced in 2013. The Administration has a chance to make it right by finalizing a 2014 rule that sets the Renewable Fuel Standard’s biomass-based diesel volumes at or above the nearly 1.8 billion gallons consumed in 2013. We also urge them to fix the RVO process so we don’t have to face this disruptive uncertainty every year. We need to put biodiesel back on the course of diversifying America’s fuel supply, supporting green jobs and boosting economic development.”
On Monday, biofuels industry leaders will hold briefings for Capitol Hill staff and the media to discuss the implications of the decision and where we go from here. The Fuels America briefing will feature Buis, Dinneen, Advanced Ethanol Council (AEC) Executive Director Brooke Coleman, and Brent Erickson with the Biotechnology Industry Organization (BIO).
Deciding not to decide is not a decision. Unfortunately, the announcement today perpetuates the uncertainty that has plagued the continued evolution of biofuels production and marketing for a year. Nevertheless, the Administration has taken a major step by walking away from a proposed rule that was wrong on the law, wrong on the market impacts, wrong for innovation, and wrong for consumers.
Today’s announcement is a clear acknowledgement that the EPA’s proposed rule was flawed from the beginning. There was no way the methodology in the proposed rule would ever work, as it went against the very purpose and policy goals of the RFS. The EPA wisely decided not to finalize the rule so they could fix the flawed methodology. Their initial proposal over a year ago was unacceptable and simply acquiesced to the demands of Big Oil and their refusal to blend more renewable fuels into the marketplace.
American Coalition for Ethanol (ACE) Executive Vice President Brian Jennings credits ethanol supporters for helping the EPA reconsider the 2014 RVO obligations under the Renewable Fuel Standard.
Big Oil came close to bullying the Administration to completely rewrite the RFS this year so oil companies could escape their legal responsibility to blend more ethanol in gasoline. But thanks to thousands of comments from ACE members and other biofuel supporters, EPA wisely chose to reconsider their ill-advised proposal which would have legitimized the so-called ‘blend wall’. While we will reserve full judgment until they finalize the 2014 targets next year, it certainly appears the Administration recognizes their proposed RFS changes were inconsistent with legislative history and the Clean Air Act.
The Environmental Protection Agency (EPA) signed a Notice of Delay today to be published in the Federal Register announcing they will not be finalizing the the 2014 applicable percentage of standards under the 2014 Renewable Fuel Standard (RFS) until next year.
“The proposed rule, issued in November 2013, generated a significant number of comments, particularly on the proposal’s ability to ensure continued progress toward achieving the law’s renewable fuel targets,” said the EPA statement. “Due to the delay in finalizing the standards for 2014, and given ongoing consideration of the issues presented by the commenters, the agency intends to take action on the 2014 standards rule in 2015. Looking forward, one of EPA’s objectives is to get back on the annual statutory timeline by addressing 2014, 2015, and 2016 standards in the next calendar year.”
“The proposal has generated significant comment and controversy, particularly about how volumes should be set in light of lower gasoline consumption than had been forecast at the time that the Energy Independence and Security Act was enacted, and whether and on what basis the statutory volumes should be waived. Most notably, commenters expressed concerns regarding the proposal’s ability to ensure continued progress towards achieving the volumes of renewable fuel targeted by the statute. EPA has been evaluating these issues in light of the purposes of the statute and the Administration’s commitment to the goals of the statute to increase the use of renewable fuels, particularly cellulosic biofuels, which will reduce the greenhouse gases emitted from the consumption of transportation fuels and diversify the nation’s fuel supply.”
The agency will also be making modifications to the EPA Moderated Transaction System (EMTS) to endure that Renewable Identification Numbers (RINS) generated in 2012 are valid for demonstrating compliance in 2013.
New National Corn Growers Association (NCGA) CEO Chris Novak talked about challenges facing the corn industry as he visited with members of the agricultural media during the National Association of Farm Broadcasting convention last week in Kansas City.
“Lots of big challenges ahead for us,” said Novak, who just took over the CEO job for Rick Tolman who retired last month. “Looking at a record crop and lower prices than we’d like to see but that’s an opportunity as well.”
Novak sees increasing demand as the most important challenge and opportunity for the industry. “How do we ensure that with a second record crop in a row that we’ve got the demand that can keep our farmers profitable?” he said. The primary demand sectors – livestock, ethanol and exports – all offer new growth potential.
“Certainly EPA’s support and implementation of the renewable fuels law as passed by Congress is going to be important to us in the short term,” he added. “Longer term we’re looking to build consumer demand for a renewable fuel that increases our energy independence and helps reduce greenhouse gases.”
Chris Novak previously served many years as chief executive officer of the National Pork Board and prior to that, he was executive director of the Indiana Corn Marketing Council, the Indiana Corn Growers Association and the Indiana Soybean Alliance.
Among the topics he addressed were the need for Congress to pass tax extenders for biofuels, first cellulosic ethanol plants going on line this year, how lower oil could be impacting domestic oil production, rail transportation issues, and of course, the Renewable Fuel Standard (RFS).
Regarding the lame duck session of Congress, Dinneen says it’s called lame for a reason but he does expect them to pass a tax extenders bill. “It will include the biodiesel tax credit and the cellulosic ethanol tax incentive, which will be good to have now that we finally have cellulosic ethanol production so they can take advantage of the tax incentive that has been there for them,” he said.
While the industry continues to expect a final decision from the EPA on the 2014 volume requirements any day, Dinneen says it could still be next week. “I fear for my Thanksgiving dinner because I suspect that the minute I carve into that turkey, I’m going to get an email that Gina McCarthy has just signed the rule,” he said. “I wish they’d get it out, let’s just be done with it.”
Seeing gas prices continue to drop nationwide, Dinneen agrees with some analysts that OPEC could be trying to cut U.S. oil production. “The Saudis, I think, have become annoyed that the U.S. is producing more (oil) and has decided that they want to try to break the back of these fracking operations,” said Dinneen, noting that those operations start losing money with prices below $80 a barrel. “Ethanol remains the lowest cost transportation fuel on the planet today and it’s unlikely that the Saudis will be able to break our back.”
The folks representing America’s ethanol industry are taking a shot at a campaign by livestock producers and fast food companies that takes its own shot at biofuels. The Renewable Fuels Association (RFA) says the Feed Food Fairness Campaign ran a one-sided advertisement in the popular Beltway publication “Politico” inaccurately blaming the Renewable Fuel Standard (RFS) for rising food prices.
“Never before in the history of misleading advertising has so much bull been slung in defense of chickens, hamburgers, and even potatoes. The ad is replete with misinformation. One would have to be awfully creative, for example, to draw any connection between biofuels and potatoes!” said Bob Dinneen, president and CEO of the RFA.
“Apparently, the Feed Food Fairness campaign is not big on facts or transparency. Their ad conveniently leaves out the key fact that their numbers come from a 2012 study on commodity costs during the worst drought in 50 years.”
“Simply put, the information is outdated and misleading. We are now well into 2014 and that drought has long since subsided. Farmers are harvesting the largest corn crop in history. Corn prices have plummeted with this record crop and yet as a recent RFA study demonstrates, food prices continue to rise. They should take an ad out to explain that!”
Dinneen also said that numerous independent analyses have concluded energy prices, not the RFS, drives food prices, citing the World Bank finding that “most of the food price increases are accounted for by crude oil prices.”
“There’s no doubt that E85 sales will double or triple over the next decade, but they also predict that the flex fuel vehicle count will continue to grow,” says RFA vice president for industry relations Robert White. “The flex fuel vehicles on the road today could use all the ethanol we produce if they used E85 more often.”
And that would be possible if there were more places for drivers to buy E85, which would happen if the Renewable Fuel Standard were allowed to work as it was intended. “If given its chance, it will create the market and this report clearly shows that more E85 would be sold,” he said.
At the National Association of Farm Broadcasting convention last week, White also talked about RFA’s “Post Your Price” contest which has been getting lots of entries showing the price of E85 around the country. The contest will award free E85 for a year to a randomly drawn entry, but they are also awarding prizes for the largest and smallest price differentials between E85 and E10. “We’ve already got one sent in that E85 was higher than E10,” White said. The lowest price for E85 so far has been $1.64, compared to $2.84 for regular.
The National Corn Growers Association (NCGA) and several other agricultural sent a letter to President Obama this week asking him to intervene with the Environmental Protection Agency regarding its proposed cuts in the 2014 volume obligations for the Renewable Fuel Standard.
“The blending targets and the methodology in your administration’s proposed rule are already causing significant harm to the biofuel sector,” the letter states. “These impacts are reverberating throughout the U.S. agriculture economy, and we expect this trend to continue if the targets and the methodology in the rule are not corrected.”
The letter discusses how the ag sector has met its responsibility in growing sufficient feedstock for biofuels, but is also working with the ethanol industry on infrastructure and advanced fuels. The letter concludes: “The EPA’s proposed policy decision is driving one of our key economic engines – the biofuel sector -¬‐ overseas. We have invested in response to the signals in the RFS and are poised to deliver the very low carbon fuels you have sought for so long. Instead of reaping the economic benefits of this investment with a build-¬‐out of a domestic biofuel industry, the methodology proposed by EPA is offshoring the industry – and our market. This is a decision we cannot afford in America’s heartland.”
In addition to NCGA, organizations sending the letter included the Agricultural Retailers Association, American Farm Bureau Federation, Association of Equipment Manufacturers, National Association of Wheat Growers, the National Farmers Union and National Sorghum Producers.