Ethanol Industry Threatened By Midwest Drought

The U.S. Environmental Protection Agency on Friday engaged in the strange exercise of setting volume requirements for biofuels under the Renewable Fuel Standard – strange because some of the levels are in the past, and others might have only a vague relationship with reality – and seemed to upset everyone.

In other words, situation normal.

The RFS mandates volumes of biofuel, like ethanol, that must be blended into the US gasoline and liquid fuel supply.

The agency said the volumes it proposed for 2014, 2015 and 2016 “represent substantial growth over historic levels” and further described them this way:

  • The proposed 2016 standard for cellulosic biofuel – those fuels with the lowest GHG emissions profile – is more than 170 million gallons higher than the actual 2014 volumes. That’s six times higher than actual 2014 volumes.
  • The proposed 2016 standard for total renewable fuel is nearly 1.5 billion gallons more, or about 9 percent higher, than the actual 2014 volumes.
  • The proposed 2016 standard for advanced biofuel is more than 700 million gallons – 27 percent – higher than the actual 2014 volumes.
  • Biodiesel standards grow steadily over the next several years, increasing every year to reach 1.9 billion gallons by 2017. That’s 17 percent higher than the actual 2014 volumes.

Overall, the total proposed amount of renewable fuel required in 2014 was set at 15.93 billion gallons, rising to 16.3 billion in 2015 and 17.4 billion in 2016. Those volumes fall short of statute, which calls for 20.5 billion gallons this year and even more, 22.25 billion gallons, in 2016.

Chart from EPA.

Chart from EPA.

In a fact sheet [PDF], the EPA said “These proposed volumes would allow volumes of conventional (non-advanced) renewable fuel of up to 13.25, 13.40, and 14.00 billion gallons to be used to satisfy the total renewable fuel requirements for years 2014, 2015, and 2016, respectively.”

The EPA has long found itself in a vice on the RFS, squeezed on one side by advocates, including corn state politicians, insisting it follow the ambitious levels set by Congress, and on the other side by opponents, ranging from oil interests to environmentalists, who argue the vast volumes are unattainable, unfair and just plain bad for the country.

Earlier this year, the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers sued the EPA over its inability to meet deadlines for setting RFS volumes (the 2014 volume proposed today was supposed to be finalized in November 2013).

The EPA said it aims to finalize these newly proposed volumes by November 30, but a tornado of critiques has already begun to plow through the agency.

Said Iowa Republican Senator Chuck Grassley, in a statement:

“It’s Christmas in May for Big Oil.  President Obama’s EPA continues to buy into Big Oil’s argument that the infrastructure isn’t in place to handle the fuel volumes required by law.  Big Oil’s obstruction and the EPA’s delays and indecision have harmed biofuel producers and delayed infrastructure developments.  While I support the Agriculture Department’s efforts to promote alternative fuel infrastructure, if the program were allowed to function as intended, private investments already would have been made.  Today’s proposal is just as harmful to biofuels as what the EPA put out in November 2013, and it’s 18 months late.  What happened to the President who claimed to support biofuels?  He seems to have disappeared, to the detriment of consumers and our country’s fuel needs.”

Corn growers in Grassley’s state echoed that view, with Jerry Mohr, president of the Corn Growers Association there, telling the Des Moines Register, “While at face value, the numbers might appear to be an improvement over the proposal released back in 2013, this new rule still doesn’t meet the requirements Congress set in statute.”

Folks on the other side were no happier.

The Environmental Working Group issued a statement headlined, “How Corn Ethanol Is Worse for Climate Change Than The Keystone Pipeline.” And the aggrieved National Council of Chain Restaurants fumed that the EPA “continues to bow to political pressure from special interests and ignore the unrelenting upward pressure the corn ethanol mandate has caused on food commodity prices.”

And this from API chief Jack Gerard, “Consumers’ interest should come ahead of ethanol interests,” said Gerard. “EPA assumes growing demand for high-ethanol fuel blends that are not compatible with most cars on the road today, potentially putting American consumers, their vehicles and our economy at risk.”