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Debate Over Higher Ethanol Blends Continues

posted on July 31, 2009

The Commerce Department announced this week that orders to U.S. factories for big-ticket durable goods fell 2.5 percent in June reflecting a steep decline in demand for commercial aircraft and continued weakness in the automobile sector. Auto sales are expected to rise in July, thanks in part, to the government's "cash for clunkers" program.

The incentive offered qualified customers up to $4,500 to trade-in older, gas-guzzling cars for newer more fuel-efficient models. But after only four days, the government suspended the deal saying the program's $950 million budget was already depleted. On Friday, the House authorized spending another $2 billion on the program.

The Renewable Fuels Association supported "Cash for Clunkers", but voiced concern late this week that the program would be paid for by depleting the renewable energy loan guarantee program.

And the ethanol industry responded again this week to a coalition of groups criticizing higher blend rates of the alternative fuel in gasoline.

Debate Over Higher Ethanol Blends Continues

Last week was the deadline for letters to the Environmental Protection Agency, or EPA, regarding the request to increase the ethanol blend level from 10 percent to 15 percent. Growth Energy, an ethanol promotion group, petitioned EPA in March to increase the blend maximum.

The move could supersede current EPA evaluations of increased ethanol blend rates and might be a boon to biofuel producers. Such a step has strong support in many, but not all agricultural sectors. Renewable fuels advocates had hoped for a quick EPA decision permitting modest increases in ethanol blends.

In a recent Agriculture Committee hearing, Senator Amy Klobuchar (kloe-buh-CHAR) said she thought EPA was taking too long and addressed two leading farm organizations.

Sen. Amy Klobuchar, D – Minnesota: "I see home-grown biofuels as a piece of the future here. I think the way to do it is with higher blend amounts to go up to say 15 percent. I wondered Mr. Johnson, Mr. Stallman, if you could comment on that."

Roger Johnson, National Farmers Union: "We would certainly support that."

Bob Stallman, AFBF: "As would we."

Roger Johnson, President of the National Farmers Union, and Bob Stallman, President of the American Farm Bureau Federation are among those supporting increasing the current ethanol blend rate to 15 percent.

Others at the hearing expressed frustration over EPA's involvement in ethanol policy reforms and pending climate change legislation.

Sen. Richard Lugar, R – Indiana: "I believe I could get a majority of Senators to repeal what's in the EPA act to eliminate EPA out of this picture. The audacious idea that we have to be pressed into this kind of legislation because somebody at EPA finds things is a ______. I'm outraged by the measurements of corn ethanol being done by EPA using extraneous events… It's outrageous."

Senate Agriculture Committee Chairman Tom Harkin, a Democrat from Iowa, recently said he may push to have the increase to E-15 approved in Climate Change legislation because of his perception that the EPA was biased against the ethanol industry.

Meanwhile, opposition is rapidly growing from an unusual coalition of 46 food, business, and environmental and sporting trade groups. They sent a letter to EPA last week opposing higher blend rates of ethanol. The groups voiced concern that increased ethanol blends would pose a risk to all gasoline-powered engines, to public health, to the environment and to consumers.

According to the National Cattlemen's Beef Association, "Changes made to the ethanol blend percentage will impact all industries that rely on corn, not just the ethanol industry. Before considering raising the blend percentage, the government should first take a serious look at how it would affect corn and cattle markets, and whether corn production would be able to keep pace with a higher mandate."

In the wake of dramatic growth in ethanol production, a group of food producers has focused on what it calls, "the negative impacts of ethanol's competition."

Meanwhile, the American Coalition for Ethanol, the nation's largest ethanol advocacy association, has filed comments with EPA on behalf of nearly 1500 grassroots members nationwide and submitted a petition signed by 7000 individuals in support of E-15.

EPA has until December to make a decision on the higher ethanol blend.


Tags: biofuels ethanol news renewable fuels