President Obama and Ag Secretary Vilsack continue to make strong statements about the importance of renewable fuels, but Congress and the EPA have not gotten the message.

The EPA continues to delay a decision on increasing ethanol blending in the fuel supply, and Congress is refusing to provide tax incentives for the industry or pass any kind of comprehensive energy policy.

Meanwhile, the USDA has decided to simply ignore the current problems and focus on the distant future. In a report released earlier this month, the USDA laid out a roadmap for the development of the cellulosic ethanol industry, often referred to as the second generation of ethanol.

The report highlights some of the serious problems that will face this next generation of ethanol - problems that could be solved by the adoption of certain policies today.

Effective July 1 a new renewable fuel standard will go into effect. This law requires at least 36 billion gallons of bio-based transportation fuels be produced by 2022. Fifteen billion gallons would come from conventional biofuel sources such as corn ethanol.
The rest would come from the second generation fuels made from crops, most of which are not being grown commercially yet.
According to the USDA report, the 15 billion gallons of corn-based ethanol can be produced using current acreage and production facilities. But to reach the goal for cellulosic production, an estimated 527 biorefineries will need to be built at a cost of $168 billion.

The USDA report also outlined the demand and logistical challenges of ethanol’s future. Currently, only 3 percent of the vehicles on the road are flex fuel vehicles capable of using higher blends of ethanol.

In addition, the number of E-85 pumps and blender pumps, capable of blending ethanol at a variety of rates, is very low. Secretary Vilsack promised that USDA would use rural development funds and Farm Bill energy funds to put in blender pumps and incentivize Detroit to make more flex fuel cars. While the future of renewable energy holds great promise, it also faces great challenges and has a very high price tag.

Meanwhile, posturing and politics continues to delay simple policy changes that could start the United States on its way to a new energy future.

Increasing the blend rate and extending tax credits would send a strong signal to the industry that the United States is serious about renewable fuel and would provide the kind of economic incentive needed for current ethanol producers to invest the billions needed to move cellulosic ethanol from the lab into full production.

Secretary Vilsack boasted on the White House blog that, “The Obama Administration has made domestic production of renewable energy a national priority.”

Yet, very little in the way of meaningful action or policy changes have been implemented in the past two years that would demonstrate that commitment. Vilsack said he is confident the United States can meet the renewable fuels goals, set forth in the RFS but admitted, “… to do so we must make further investments in areas including research and development of feedstocks; sustainable production and management systems; efficient conversion technologies and high-value bioproducts and analysis tools.”

This all sounds wonderful, but unless the Administration and Congress allocate funds, which will not be easy as federal budget deficits rise, this will be just more big talk with no action.
Our energy future and agricultural economy are too important for this kind of treatment.

The views and opinions expressed in this column are those of the author and not necessarily those of Farm World. Readers with questions or comments for Gary Truitt may write to him in care of this publication.