Ethanol backers come out swinging to defend industry
WASHINGTON — Ethanol supporters are mounting an all-out lobbying blitz they hope will convince the White House to backtrack on its decision to reduce the amount of the renewable fuel required to be mixed into the country’s gasoline supply next year.
A week ago, the Environmental Protection Agency proposed cutting the fuel requirement in 2014 to 15.2 billion gallons of ethanol and other biofuels, 3 billion gallons less than Congress required in a 2007 law. Traditional biofuels, comprised mostly of corn, would be reduced to 13 billion gallons from 14.4 billion.
The decline marked the first time the White House scaled back the blend level. The Obama administration has made renewable fuels a focal point of its energy agenda.
With billions of dollars of potential profit on the line, ethanol producers, corn growers and other groups know they have a tough road ahead and a limited window in which to change the thinking of the EPA and White House officials overseeing the mandate, better known as the renewable fuel standard. The law requires refiners to buy alternative fuels made from corn, soybeans and other products. The EPA proposal will be open to a 60-day comment period, with the agency expected to finalize the rule in the spring of 2014.
“We will be very actively engaged,” said Tom Buis, chief executive of Growth Energy, a group that represents ethanol producers. “We know what we are up against. We will try to ... turn around the EPA’s thinking on how to move forward.”
Biofuel producers have wasted little time trying to get their message through. Last Wednesday, just five days after the measure was made public, Growth Energy, the Renewable Fuels Association, ethanol maker Poet, the National Corn Growers Association and others met with Agriculture Secretary Tom Vilsack, White House staff and EPA officials. They underscored the damaging effect the proposal would have on the future of biofuels.
Vilsack said the administration told the biofuels industry it remains “committed” to the renewable fuels requirement and “understand the importance of it” for consumer choice, creating jobs, reducing the country’s dependence on foreign energy and saving motorists money at the pump. The former Iowa governor said more needs to be done to expand consumer access to higher grade ethanol blends such as E85, which includes 85 percent of the corn-based fuel.
The ethanol industry is expected to push ahead with more meetings with White House officials, publish its own remarks during the EPA’s comment period and pepper media with advertisements touting the benefits of its product. Bob Dinneen, president of the Renewable Fuels Association, said the EPA overstepped its authority under the law and raised the specter of a legal challenge if the agency did not reverse course in the final rule.
“We are hopeful that in the comment period the agency evaluates this issue with a little more thought and ultimately modifies its proposal,” said Dinneen. “If they don’t, we are going to evaluate our options from there, and we do think the legal underpinning, their existing reasoning, is highly vulnerable to a legal challenge.” If a lawsuit did occur, he said, it would be after the EPA finalized the rule.
Bruce Babcock, an Iowa State University economist, said despite the pleas from the ethanol industry the EPA is “unlikely” to change the 2014 benchmark after listening to all the comments. “EPA, I’m sure, was fully aware of the arguments pro and against pushing through the blend wall and they chose not to do it,” said Babcock. “This is a major policy reversal.”
The blend wall is at the center of the ethanol argument. When Congress updated the renewable fuel standard in 2007 it expected consumer demand for the fuel to keep increasing. That is why the law required annual increases in the blending level through 2022.
But as consumers have driven less and automobiles have become more efficient, the need for fuel has dropped, making it harder for the annual ethanol requirements to be met as refiners hit the blend wall. Most fuel today contains 10 percent ethanol.
Higher-grade blends, such as E15 or E85, have not grown fast enough to absorb more ethanol to meet the congressional mandate. The EPA has said there are not enough pumps and other infrastructure in place to absorb more than 10 percent ethanol.
As a result, greater efficiency and limited infrastructure have kept demand lower than it otherwise might have been, leading to a bump up against the blend wall — a factor the agency cited in its proposal.
Dinneen said Congress did not include infrastructure as a factor in setting the blend levels. By including the blend wall and infrastructure challenges into the process, that “is the minute you turn the RFS over to the oil companies because they are the ones that get to control that, how much infrastructure is used and whether they want to provide the market access of our fuel to the consumer,” he said. “History has demonstrated time and time again that they would do everything in their power to prevent that from happening.”