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Corn ethanol bill to gut U.S. Renewable Fuel Standard?

Corn Ethanol Mandate Elimination Act of 2015 introduced. Biofuel advocates displeased, fight back.  

The Corn Ethanol Mandate Elimination Act of 2015 was introduced Feb. 26 by Pennsylvania Sen. Pat Toomey and California Sen. Dianne Feinstein. The bill would remove corn-derived ethanol as an option to fulfill Renewable Fuel Standard (RFS) production goals.

The bill’s introduction comes amid disputed claims that government biofuel mandates — which required refiners and blenders to use over 18 billion gallons of biofuels in 2014 — have caused food and fuel prices to rise.

“The federal mandate for corn ethanol is both unwise and unworkable,” said Feinstein. “Our bill addresses that with a simple, smart modification to the Renewable Fuel Standard program. A significant amount of U.S. corn is currently used for fuel. If the mandate continues to expand toward full implementation, the price of corn will increase. According to the Congressional Budget Office, that would mean as much as $3.5 billion each year in increased food costs. Americans living on the margins simply can’t afford that.

“Our infrastructure has a ceiling for the amount of corn ethanol that can be used, and we're rapidly approaching it. Companies are physically unable to blend more corn ethanol into gasoline without causing problems for many gas stations and older automobiles. The mandate also pits corn ethanol against other renewable fuels, which has stunted the growth of environmentally friendly advanced biofuels like biodiesel and cellulosic ethanol. Once the mandate for corn ethanol is gone, the RFS program will be able to focus on those fuels that best reduce greenhouse gas emissions and don’t compete with our food supply.”

Outraged biofuel advocates were quick with withering criticism saying that not only are Feinstein and Toomey wrong on the facts but their motives are purely political.

“Most folks on Capitol Hill do understand the merits of the RFS and that you shouldn’t be changing the rules in the middle of the game,” said Bob Dinneen, president of the Renewable Fuel Association during a press conference shortly after the bill’s introduction. “They aren’t bamboozled by the talking points from ‘big oil’ and ‘big food’ as Sens. Toomey and Feinstein appear to have been.”

Convenient cover?

The arguments about the rise in food prices due to the RFS are a convenient cover, said Roger Johnson, president of National Farmers Union. “Corn prices rose sharply in 2012 due to the worst drought the nation has seen since the Dust Bowl days and high energy prices. Since then, corn prices have dropped precipitously yet food prices have remained elevated and so have the profit margins of those companies.”

The bill comes after the EPA proposed a new RFS rule in 2014 that biofuel proponents claimed would have gutted the fledgling industry. “The continued delays create great uncertainty for the biodiesel industry and soybean farmers and limits the industry’s ability to invest and expand,” said Ray Gaesser, American Soybean Association President, late in 2014. “The Proposed Rule was unacceptable and would have taken biodiesel backward from the amounts produced and utilized in 2013. However, ASA believes that EPA can and should finalize a 2014 rule that sets the biomass-based diesel volumes at or above the nearly 1.8 billion gallons that were produced and consumed in the U.S. in 2013.”

How likely is it that the Toomey/Feinstein bill will receive a vote and become law?

“I think it’s highly unlikely but you never know,” said Dinneen. “That’s why we are making sure people understand the unintended consequences and false premises upon which this legislation has been introduced.

“The fundamental mathematics of energy policy on Capitol Hill haven’t changed with Republican control. It isn’t likely this will get much traction. It was introduced as an amendment in the Keystone (pipeline) debate and they determined not to even have a vote on it. I don’t think the votes are there.”

'Big oil' bashed

Big oil continued to take a beating from those claiming the bill would further chill investment in biofuels. “One of the things that the oil industry trades in very well is uncertainty,” said Brooke Coleman of the Advanced Ethanol Council during the press call. “They know — notwithstanding the fact that Sen. Feinstein has proposed a bill that probably won’t every be signed or get a lot of momentum in Washington, D.C. — that investors overseas and in southern California don’t necessarily understand that or perceive it to be a risk. So, what Sen. Feinstein is doing is taking the investors in her state and making it harder for them to invest in a U.S. product.”

The point was pressed home through a letter sent to President Obama by, among others, the National Corn Growers Association, DuPont and ADM. “When it was passed, the RFS offered policy stability with a gradual and predictable ramping up of renewable fuel targets year by year. It created the market certainty needed to foster private sector investment in these new innovative fuels. The 2014 proposed rule undermined Congress's intent, changing the rules midstream, creating uncertainty in the market and making it virtually impossible for additional U.S. cellulosic ethanol facilities to secure financing and investor support.”

Why was the letter sent to the White House when the bill was introduced in the Senate?

“The proponents for opening up the RFS and ‘reforming’ — which is code for weakening — the RFS in Congress are drawing a connection between the RFS being delayed and the need to reform it,” explained Coleman. “Our response with the letter is to send a clear signal to Congress that the issues with the RFS aren’t legislative but administrative. That means the tonic for our issues is over at the White House and the EPA and they can put this program back on track using the administrative authority they already have.”

Asked about Feinstein’s reasons for introducing the bill, Coleman said he has no direct knowledge, “but I assume she was trying to be responsive to a certain interest (group).”

Dinneen said he doesn’t believe “it’s much of a coincidence that the chain restaurants were up on the Hill earlier this week. That’s clearly something that impacts her. There are competing interests in California and there are certainly many Californians that would believe this legislation is as wrong as we do.”

Coleman agreed. “Some of the largest oil companies are headquartered in (California). I think they’ve got their hands all over this.”

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