United States produced 13.3 billion gallons of ethanol last year that was blended into an estimated 134 billion gallons of gasoline. At that level, the Environmental Protection Agency believes America is close to hitting the so-called “blend wall” when no more gasoline is available to be blended with ethanol.
In response, the Obama Administration proposed cutting the Renewable Fuels Standard in 2014 from the original mandate of 15.2 billion gallons of biofuel to 13.1 billion gallons.
Grain producers who sell their corn to ethanol plants say the biofuels industry is an effective hedge against low prices. And the ethanol industry touts the homegrown fuel’s impact on retail gasoline prices, job creation and emissions of greenhouse gasses.
On the other side of the debate, livestock producers claim the diversion of corn for fuel is driving up production costs. And the oil industry claims it’s lost market share due to government mandates requiring ethanol in America’s fuel supply.
Consumers also are mixed in their sentiments toward renewable fuel. So to say the plan to cut ethanol blending requirements next year by 30 percent is controversial would be an understatement. And at a public hearing on the proposal in Washington late this week, EPA got an earful.
There are many players in the debate that represent virtually every aspect of the food supply chain from grain farmers and animal producers to ethanol producers and oil refiners.
Those in favor of cuts to the Renewable Fuels Standard, or RFS, seek relief from what they feel is the reason for higher feed and food costs.
Those opposed rolling back the RFS say the benefits of the grain-based fuel go beyond cleaner air. Statistics from the Renewable Fuels Association, show the ethanol industry is directly responsible for nearly 90, 000 U.S. jobs. According to proponents, those jobs add $43 billion to the nation’s gross domestic product.
The issue is volatile enough that nearly 170 people lined up for a hearing held just outside the Washington beltway in Virginia on Thursday to testify for or against the proposed cuts.
Bob Dinneen, Renewable Fuels Association: “The RFS was designed to drive investment in new technologies, to drive innovation, to drive new market opportunities. It was not designed to be convenient for the oil companies. The RFS is forcing market change. It is telling the oil companies business as usual can’t happen. But I implore you, throughout the day listen to those people that are concerned about what this program does for rural America, what this program does for consumers, what this program does for investment in new technologies and revise this rule.”
Among those wanting to make their voice heard were representatives of the American Petroleum Institute, or API, a trade association representing all aspects of U.S. petroleum production.
Bob Greco, American Petroleum Institute: ”API is encouraged that, for the first time, EPA has acknowledged that the blend wall is a dangerous reality that must be addressed to avoid negative impacts on America’s fuel supply and to prevent harm to American consumers. However, we will continue our call for Congress to repeal the RFS to protect consumers from this outdated and unworkable program.”
API leaders are concerned the mandate could cause severe fuel rationing, drive up the cost of gasoline by 30 percent by 2015 and lead to a $770 billion decrease in U.S. GDP as well as a $580 billion decrease in take-home pay for American workers.
Bob Greco, American Petroleum Institute: “EPA’s continued tardiness has real adverse effects on our industry. Obligated parties need this information ahead of the compliance period to make operational, logistics and investment decisions.”
Representatives of animal agriculture groups including the National Cattlemen’s Beef Association, the National Turkey Association and the National Chicken Council were in attendance.
Mike Brown, National Chicken Council: “Congress created this mess, and ultimately, Congress can fix it... ....As corn comprises nearly 70 percent of the feed given to chickens, our single largest input cost, rising prices directly affect farmers’ bottom line. Since 2007, more than a dozen poultry companies have filed for bankruptcy, been sold or simply closed their doors altogether due in large part to the feed costs brought on by the RFS. ... I want to emphasize that we are not against corn ethanol. We are not against ethanol. But we are against is the hand of government directing into this market and giving it false signals.”
And state and federal politicians also were among those gathered including governor of the nation’s top ethanol producing state.
Gov. Terry Branstad, R-Iowa: “I’m here to share my strong opposition to this harmful proposal from the EPA and to emphasize the tremendous economic importance of the Renewable Fuels Standard on our nation’s agriculture, agribusiness and biofuels industry. It’s estimated that this EPA proposal will cost 45,000 jobs in this nation. We don’t need to drive the number of people employed down we need to drive it up. 45,000 families would face undue financial hardship and stress simply at the hands of the EPA catering to Big Oil. And they’re not satisfied. They won’t be satisfied until you repeal it altogether.”
The EPA’s 60-day comment period on the issue closes on January 28.