What's going on with ethanol, biofuels and RFS?

What's going on with ethanol, biofuels and RFS?

Environmental Working Group says ethanol is not a renewable fuel; House committee holds hearing on biofuels, and EPA may shift responsibility for compliance with RFS.

Updated with information from National Corn Growers Association.

Senators call for EPA to follow the intent of RFS

Sens. Chuck Grassley, R-Iowa, and Amy Klobuchar, D-Minnesota, along with 17 other senators sent a letter to the Environmental Protection Agency on March 23 urging them to follow the congressional intent of the Renewable Fuel Standard by increasing blending targets under the RFS for 2017.

The RFS was authorized in 2005 and expanded in 2007. It's been a perennial political hot topic. (Photo: photosoup/Thinkstock)

“A strong RFS makes our country more energy secure, increases competition and consumer choice in our transportation sector, and ultimately strengthens our economy,” the senators wrote to Administrator Gina McCarthy.  “We need a strong RFS, and we need more biofuels.  We expect that you will get the program ‘back on track,’ and we look forward to seeing a proposed rule released on time that removes the distribution waiver and re-establishes the United States as a leader in the biofuel sector.”

The senators’ letter stated the EPA’s last rule setting blending targets failed to provide the incentive to drive growth in the development of renewable fuels, particularly cellulosic ethanol.

“Since the proposal was first leaked in the fall of 2013, not a single new cellulosic project has broken ground in the United States and many planned or previously announced projects have been halted.  In the meantime, new investments in cellulosic projects continue to emerge in China, Europe, and Brazil.  The final rule for 2014, 2015, and 2016 did not change this trend,” the senators wrote.  

The EPA’s final rule for 2014, 2015, and 2016 was somewhat higher than the proposed rule, but they were still lower than what ethanol producers anticipated they could produce.

Joining Grassley and Klobuchar on the letter are Sens. John Thune, Richard J. Durbin, Mark Kirk, Al Franken, Joni Ernst, Heidi Heitkamp, Deb Fischer, Martin Heinrich, M. Michael Rounds, Claire McCaskill, Roy Blunt, Debbie Stabenow, John Hoeven, Tammy Baldwin, Sherrod Brown, Gary Peters and Joe Donnelly. 

The biofuels community commended the senators for their unwavering support for a strong and robust RFS and for sending a clear message to the EPA.

“Getting the RFS back to the statutory levels Congress intended is critical in moving our nation forward to energy independence by using cleaner burning, homegrown biofuels, like ethanol, which reduce harmful emissions and our reliance on foreign oil imports. As important, returning to the statutory levels intended by Congress will provide the necessary certainty producers need to move forward with critical business decisions.”

Source: NCGA, Sen. Charles Grassley

EPA reported to be considering shift in RFS compliance

Platts reports that the U.S. Environmental Protection Agency is considering a request to shift the responsibility for complying with the federal biofuels mandate to blenders from refiners.

The mandate is part of the Renewable Fuel Standard, which was authorized in 2005 and expanded in 2007. Refiners show compliance with the RFS by obtaining credits, which are known as Renewable Identification Numbers, or RINs.

In February, Valero and Monroe Energy petitioned the EPA and the U.S. Court of Appeals for the District of Columbia to make blenders responsible for obtaining the RINs. Valero and Monroe Energy say making blenders responsible would encourage retailers to install blender pumps, according to Platts.

Related story: EPA rulemaking for RFS under fire

Committee doesn’t invite biofuels supporters to hearing

According to a March 16 article in Biomass Magazine, the subcommittee of the House Committee on Oversight and Government Reform held a hearing on the Renewable Fuel Standard on March 16 and didn’t invite the biofuels industry.

The purpose of the hearing was to examine the EPA’s management of the Renewable Fuel Standard, according to the committee website.

The witness list included: Christopher Grundler, EPA; John DeCicco, University of Michigan Energy Institute; Kelly Stone, ActionAid USA; Wallace Tyner, Purdue University, and Nicolas Loris, The Heritage Foundation.

The Biomass Magazine article quotes Tom Buis, co-chair of Growth Energy.

“Holding a hearing on the RFS without any biofuels stakeholders is unacceptable and defeats the very purpose of what this congressional committee is tasked to accomplish,” Buis said.

Not a renewable fuel

Meanwhile, the Environmental Working Group says that corn ethanol is not a renewable fuel.

The RFS prohibits the destruction of landscape to grow corn, but that’s exactly what is happening, according to the EWG article. It further states that the EPA has dropped the ball by not monitoring land conversion near ethanol plants.

It cites an article by Tyler Lark at the University of Wisconsin, which found that corn and soybean cultivation reached record highs in the late 2000s.

Lark’s study found that land not used for agriculture for 40 years was converted to cropland for raising corn from 2008 to 2012.

Related story: Study questions effects of conservation policy on cropland conversion

Is RFS relevant? -- >>>

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A boon or boondoggle?

A study from Strata Policy and the Institute of Political Economy found that the RFS hasn’t been a boon for rural communities, according to an article at Heartland.org.

Instead, the study findings say:
-Taxpayers have spent $58 billion for direct ethanol subsidies since 1980, in addition to costs from the mandate.
-Unemployment in the Corn Belt declined by 1.41% since 2005, compared to 1.89% in the rest of the nation.
-Per-capita income in the Corn Belt has dropped by $1,942.51 since 2005, compared to $1,614.32 in the rest of the nation.
-10% of ethanol refineries closed in 2012.
-The RFS distorted the market in the Corn Belt.

RFS remains relevant

In a column in the April issue of the Ethanol Producer Magazine, Renewable Fuels Association president and CEO Bob Dinneen says there is an idea circulating on Capitol Hill that the RFS is no longer relevant.

The RFS was enacted when corn farmers were selling their product for less than the cost of production and it provided a value-added market, he said. It was enacted when Congress was looking for ways to address climate change, he said, and it has reduced greenhouse gas emissions by more than 354 million metric tons since it began. The RFS was enacted to provide competition for consumers, Dinneen wrote and it has reduced gasoline price by about $1 per gallon. The RFS has also improved U.S. energy security by reducing gasoline imports.

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