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Corn ethanol RFS opponents also putting pressure on D.C.

 

 

By SUSAN BLOWER

Indiana Correspondent

 

INDIANAPOLIS, Ind. — Halfway into the year, the biofuel industry is still waiting for the Renewable Fuel Standard (RFS) target to be finalized for 2014. But Ken Parrent, director of Biofuels for the Indiana Corn Marketing Council, said the ruling is not expected for another month.

Late last year, U.S. EPA proposed lowering the mandate from 14.4 billion gallons of corn-based ethanol to 13 billion, a level that was lower than in 2012 or 2013. Biodiesel volumes also were reduced to 1.28 billion gallons, a sharp cut from last year’s actual production of 1.8 billion.

By reducing the mandate, EPA in effect "put on the brakes, casting doubt on the future of ethanol," Parrent said. "The cut in biodiesel may hurt worse and does not make sense in light of its record production.

"It takes a huge investment to build plants. It’s tough, with the future uncertain now that the incentive may not be there."

Indiana has 12 ethanol plants, with two more coming online by the end of the year, he said, and the state ranks sixth in capacity and seventh in production. The world’s largest biodiesel plant is in Claypool, Parrent added.

The uncertainty continues to worry supporters of both the petroleum and biofuel industries. In a letter to the EPA, the Des Moines Register reported the American Petroleum Institute (API) said the delay in implementing the RFS is unacceptable.

Last week almost 100 biodiesel supporters talked to leaders in Washington, D.C., about establishing more consistent policies, raising the biodiesel RFS volumes and reinstating the $1 per-gallon biodiesel tax incentive, which expired last December.

In addition, according to information from the Indiana Ethanol Forum last month, more than 300,000 public comments were published in response to EPA’s action last year – most of them negative – and EPA has stated that it has needed extra time to process them.

The EPA is required by law to finalize blending requirements for the following year by Nov. 30, a deadline it has missed since 2011, according to API. RFS is a federal program that requires oil refiners and blenders to use increasing amounts of various renewable fuels each year, culminating in 36 billion gallons of renewable fuels blended into the nation’s fuel supply by 2022.

Under the 2007 RFS law, the EPA can lower annual targets if supply is short, such as in the event of a drought, or if economic concerns are present. This is the first time a cut in blending levels has been proposed since the law was passed, according to TheHill.com

Parrent said corn-based ethanol is not short in supply, but the infrastructure that was supposed to be built to support distribution by the petroleum industry has lagged behind.

"In 2013 ethanol production matched demand with 13.3 billion gallons, nearly meeting the RFS-mandated 13.8 billion gallons ... Ethanol has done its part to meet the RFS, but Big Oil did not," he charged.

The petroleum industry has stated it does not have the infrastructure in place to meet increasing targets for the RFS, a factor cited by the EPA in making its proposal last fall, as well as concerns from the auto industry that ethanol can hurt cars if mandates force a greater-than 10 percent blend into gasoline.

Litigation is probable from either ethanol or petroleum sides depending on the outcome, Parrent said.

Support for ethanol seems to be wavering in D.C. A bill to eliminate the corn-based ethanol requirement altogether was introduced to the U.S. House of Representatives in April 2013 and has 68 co-sponsors. More recently, Rep. James Lankford (R-Okla.) introduced the Phantom Fuels Elimination Act, H.R. 4849, which would remove the corn ethanol mandate and require domestic production of all other RFS blending requirements.

Ultimately, if the ethanol mandate is reduced or removed, corn growers would see a lower price for their product again, Parrent said. While they used to rely upon deficiency payments, those government supports now are gone, he added.

"It’s important to continue to talk to Congress about it. The Obama administration has been supportive generally of biofuels, although their EPA has suggested a reduction," he said.

7/2/2014