October 16th marks the 40th anniversary of the 1973 oil embargo. Economic times are hard enough as is today; hopefully it won’t take another energy crisis to wake Congress up to the importance of a domestically-produced, renewable fuel alternative.
Earlier this month, the Wall Street Journal published Letter to the Editor of mine, which was in response to "Ethanol vs the World." On the same day, the Journal published yet another sarcastic screed, “How Ethanol Causes Joblessness” that ridiculed what it claims was the methodology behind a study by academic economists that showed the increased use of domestic ethanol fuel lowered gas prices by a national average of $1.09 in 2011. Responding to this attack, I submitted another editorial, which was rejected by the Editorial Features Staff. Please read said editorial in this post.
America's commitment to ethanol and renewable fuels has been a unparalleled success for rural America. It has created jobs, spurred economic activity, and even given some rural residents a reason and the opportunity to move back home. Yet, critics of ethanol would lead you to believe that ethanol is the scourage of rural America. A new paper from an anti-ethanol group, Food and Water Watch, goes so far as to compare domestic ethanol production to the illegal methamphetamine plague impacting rural areas. Like much of the rhetoric from those opposing ethanol, this paper is not based on the facts and takes poetic license to irresponsible levels.
Today, ethanol-blended fuels are bringing the price down at the pump for consumers. Customers are able to spend between a nickel and a dime less than what they would pay for conventional gasoline. Despite this, the New Hampshire House of Representatives recently voted to put a ban on corn-based ethanol in the state. This bill will not only increase gas prices and lead us down a road toward more imported oil, it will also hinder the very market into which advanced and cellulosic ethanol producers will one day want to sell.
The Nebraska Senate has taken an important step toward increasing the state's use of domestically produced ethanol by approving a bill to repeal labeling requirements for 10 percent ethanol blends. This is a good first step, but oil interests in the state will not swallow this bill without a fight.
The USDA has released its February estimates of U.S. and global grain supplies. Some revisions, all of which were expected, slightly reduce USDA's estimates of leftover corn at the end of the marketing year. Let the wild claims and "alarm bells" ring from ethanol's detractors begin.
Environmentalists were among the early supporters of ethanol as they sought to mitigate the damage done by man’s overly heavy dependence on petroleum. Now that ethanol is trying to go mainstream, environmentalists are turning on ethanol production in an oil-fueled haze. But it wasn’t that long ago the leading environmentalists were urging more ethanol use.
Following this morning's remarks by Agriculture Secretary Tom Vilsack regarding Obama Administration biofuel policy, Renewable Fuels Association President and CEO Bob Dinneen issued the following statement: "The Obama Administration has shown strong leadership on the issue of domestic biofuels, putting forward a vision that recognizes the importance of the existing industry and the potential of new technologies. Domestic ethanol production is one of the few bright spots in a gloomy economic forecast, providing tens of thousands of jobs in hundreds of rural communities all across the country. By expanding the scope of American ethanol production to include new feedstocks from grasses to wood waste to algae, the industry can extend the benefits seen in rural America to every corner of the country".....
Since a polemic paper from environmental attorney Tim Searchinger was released in February 2008, a false notion that American ethanol production from grain was leading to Brazilian rainforest destruction has permeated discussions around ethanol's environmental contributions. Now, a team of researchers from the Department of Energy have analyzed real world data from the period of greatest American ethanol expansion and found this notion to be without merit.
Based upon Clean Air Act requirements, EPA is to consider all scientific evidence when evaluating new fuels. In the case of the E15 waiver, however, EPA completely ignored credible data submitted by RFA that demonstrated the efficacy of E15 in older vehicles. Ricardo, Inc., an internationally recognized automotive engineering firm used EPA’s own methodology to evaluate the likely effects of using E15 in vehicles model year (MY) 2000 and older. It is previously unheard of for EPA to deny a waiver request for vehicles that are beyond their EPA-determined useful life, as all MY2000 and older vehicles will be on January 1, 2011. Alas, c’est la vie. It is now up to the industry to make a silk purse out of this sow’s ear. We have introduced new fuels in this country before and the pathway to doing so is clear. It is a complicated process and one that will not happen overnight. Fortunately, the RFA has already begun this process.
Today, the Environmental Protection Agency granted the E15 waiver for model year (MY) 2007 and new vehicles. By doing this, the EPA is missing an opportunity to reduce America’s dependence on foreign oil and create new economic opportunity. This scientifically unjustified bifurcation of the U.S. car market will do little to move the needle and expand ethanol use today. Limiting E15 use to MY2007 and newer vehicles only creates confusion for retailers and consumers alike. America’s ethanol producers are hitting an artificial blend wall today. The goals of Congress to reduce our addiction to oil captured in the Renewable Fuels Standard cannot be met with this decision.
Deputy Assistant to the President for Energy and Climate Change Policy Heather Zichal reiterated the commitment of the Obama Administration to the entire ethanol industry regardless of technology or feedstock at RFA's Annual Membership Meeting this week. Specifically, Zichal highlighted the Administration's support of existing ethanol policy, including the tax incentive in its current form, as well as its commitment to ethanol technologies of every kind.
Since its creation, the Department of Energy’s Renewable Energy Loan Guarantee Program (as established by the 2005 energy bill) has been defined by inaction and obstruction and is largely seen as a complete failure to date in terms of bringing next generation biofuel technologies to the marketplace. Additionally, the loan guarantee program has been raided time and again to pay for other federal programs with little if anything to do with renewable energy. Despite repeated promises to restore funding, money stolen from the program is still MIA. At the Senate hearing this Thursday, DOE officials and members of Congress have some explaining to do.
The growth and commercialization of next generation biofuels is essential to the long term success of America’s ethanol industry. This success does not need to come at the expense of current technologies. The RFA does not believe that U.S. biofuel policy should be crafted in a manner that jeopardizes the tremendous advances that have come from the investment our nation has made in renewable fuels or causes cannibalization in the industry. It is true that we need to support and promote the growth of next generation biofuels in order to become energy independent and to combat global warming. However, this will not be achieved by pitting different sectors of the industry against one another or abandoning support for one sector of the industry for another when the entire industry needs support as long as we continue to provide permanent tax breaks to oil producers.
Moving to E15 will require cooperation between the ethanol industry and those in the business of bringing fuel to American drivers. Today, that cooperation was on display as the RFA joined representatives from the nation's major gasoline marketing trade associations to address some of the challenges a move to E15 may present.
For years now, we have heard environmentalists and some in the government tell us that gasoline production and oil use don't have indirect greenhouse gas emissions. It is only biofuels like ethanol, we have been told, that must suffer penalties for these so-called indirect emissions. According the a new groundbreaking report to be published in Environmental Science, requiring our military to protect the free flow of oil comes with environmental consequences. And those impacts are potentially HUGE.
This week, the Congressional Budget Office (CBO) released a report critical of ethanol tax incentives, but devoid of any comparisons to other energy tax incentives (like those for Big Oil). The report relied on what were, in large part, worst-case assumptions and also failed to give credit for co-products now an undeniable component of the industry that must be taken into account. After a thorough review, we have come up with some of key takeaways and criticisms of the report.