Hoosier Ag Today by: Gary Truitt
The long awaited, final decision by the EPA on the amount of ethanol that can be blended into our fuel supply was made on Monday. The EPA did not grant the ethanol industry the levels they had asked for, but did increase the amount of ethanol that can be blended. Growth Energy Co-Chair Tom Buis says it is a step in the right direction and one that breaks the barrier that has been preventing growth in ethanol demand, “The announcement with increased blending levels clearly signals that the blend wall, that has limited the growth of ethanol, is artificial and that the EPA is going to move forward, is a good thing.” Buis said, while the final rule is not what was called for in the RFS, it is an indication that the Obama administration is supportive of growth in renewable fuels.
The final rules calls for 16 billion gallons to be used in 2014 and 2015 and increases that number to over 18 billion gallons in 2016. Secretary of Agriculture Tom Vilsack said the EPA decision shows the support of the administration for renewable fuels, “The rule released today is a positive step forward providing for continued growth in all parts of the Renewable Fuel Standard — advanced, biodiesel, cellulosic, and conventional — building on the Obama Administration’s and USDA’s commitment to biofuels and American-grown renewable energy.”
But many organizations were less than supportive of the EPA ruling. Indiana Corn Growers Association President Herb Ringel, a farmer from Wabash, said, while corn growers appreciate the EPA taking a small step forward by revising its original proposal, they are disappointed the agency did not allow the full amount called for in the RFS, “In July, more than 2,000 Indiana farmers and consumers asked the Environmental Protection Agency to follow federal law and stop its cuts to the Renewable Fuel Standard. While we appreciate the EPA taking a small step forward by revising its original proposal, any reduction in the RFS has a negative impact on our economy, energy security, and the environment. This decision provides consumers with fewer options and increases our dependence on foreign oil.” He added the Renewable Fuel Standard is the only law that has lowered gasoline prices, cut greenhouse gas emissions, and reduced our dependence on foreign oil.
Jeff Broin with POET, the largest ethanol producer in Indiana, said this indication from the White House that they will allow more ethanol to be used will help drive investment in ethanol and cellulosic ethanol projects here in the US, “It is a start and will help to bring investor interest back to ethanol and cellulosic ethanol, but we will need to see more movement toward increasing blending levels.” The Renewable Fuels Association, in a statement, took a much more pessimistic outlook, “It will deepen uncertainty in the marketplace and thus chill investment in second-generation biofuels. Unlike Big Oil, the ethanol industry does not receive billions in tax subsidies and the RFS is our only means of accessing a marketplace that is overwhelmingly and unfairly dominated by the petroleum industry. Today’s decision will severely cripple the program’s ability to incentivize infrastructure investments that are crucial to break through the so-called blend wall and create a larger market for all biofuels.”
Soy diesel supporters were generally supportive of the final rule but called for continued progress. “The volumes established by EPA will provide some certainty to biodiesel producers and feedstock providers and will continue to generate many benefits for consumers and the environment,” said the American Soybean Association. ASA President Wade Cowan said, “We are glad to see the volumes for biomass-based diesel increased above the Proposed Rule and previous proposals. Biodiesel provides significant economic and environmental benefits, and we have the capacity to do more. The Administration wants to address climate change and reduce greenhouse gas emissions, and biodiesel can contribute more to that effort.”
“We need more biofuels, not less, and Farm Bureau called on EPA earlier this year to protect the RFS,” said American Farm Bureau President Bob Stallman. “We are disappointed to see the agency move forward with a decision that will stall growth and progress in renewable fuels as well as the broader agricultural economy. Farmers, ranchers and consumers will be impacted by the drop in ethanol production and the falloff in livestock feed that goes along with it. In the end, we lose the jobs and stability that come from growing renewable fuel.”
While the increased volume levels were a victory for ethanol, the EPA rule does not do away with the oil industry’s ability to refuse to blend ethanol. “The whole purpose of the RFS was to prohibit oil companies from using their market powers to block market access for America’s renewable fuels industry. Now, the President is saying that, if oil companies refuse to comply with the law, that the EPA can waive the obligation,” said Americans for Energy Security and Innovation Chairman Jim Talent. National Farmers Union President Roger Johnson, usually a strong administration supporter, was less than impressed with the EPA ruling, “The administration’s decision to issue RFS volume obligations below their statutory requirements exacerbates the serious damage already done to the renewable fuels industry and America’s family farmers. Clearly, the administration has accepted Big Oil’s talking points and paved the way for a weaker RFS to the detriment of economic prosperity in rural America and the administration’s own climate change goals.”
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