Texas governor Rick Perry is asking the federal government to cut “skyrocketing” food prices by waiving half of the renewable fuel standard for ethanol made from grain.
The Renewable Fuels Association criticized the governor’s action, saying that reducing the use of ethanol will not appreciably reduce grain prices for livestock producers and food processors in Texas.
“But eliminating 4.5 billion gallons of fuel from the marketplace as the 50% waiver of the Renewable Fuels Standard sought by Governor Perry would do will increase gasoline and diesel prices even more. While this may benefit Texas oil companies, it will certainly hurt consumers in Texas and the rest of the country.”
RFA says that Governor Perry is ignoring the conclusions of a Texas A&M report he himself requested. According to the findings of that study, “relaxing the RFS does not result in significantly lower corn prices.” The Texas A&M report also stated that, “The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs, evidenced by $100 per barrel oil.”
Responding to Governor Perry, Renewable Fuels Association President Bob Dinneen issued the following statement:
“Tampering, adjusting or removing the requirements will not have the impact on grain prices that Governor Perry seeks, nor will it bring the food price reductions he claims. The skyrocketing price of oil, surging global demand for grains and meat, poor harvests around the globe, and a weakened US dollar are the real factors determining world grain and food prices. The production and use of ethanol, while increasing demand for corn, is not contributing significantly to food price escalation. It is, however, helping to keep and oil prices lower than they might otherwise be.
“Replacing the 4.5 billion gallons of fuel Governor Perry seeks to remove from the marketplace would come at great expense to Americans from all parts of the country. Given that America’s gasoline refiners continue run their refineries at far below capacity and oil prices show no signs of abating, it rapidly becomes clear that removing this volume of ethanol would send gasoline and diesel prices far higher than we are seeing today. In other words, Governor Perry’s approach is a surefire way to guarantee even higher gasoline prices.
“I strongly encourage Administrator Johnson to recognize that oil dependence and the high prices we see today play a far greater role in the complex issue of food prices than ethanol does and to roundly reject the waiver application by the state of Texas.”
A new analysis of America’s ethanol industry shows dramatic efficiency gains in ethanol production have been made in the last five years.
According to an analysis conducted by the Argonne National Laboratory, American ethanol facilities are using less energy and water than just five years ago while producing more ethanol. Water consumption is down 26.6 percent, grid electricity use down almost 16 percent and total energy use almost 22 percent lower. (Read the full report from Argonne in pdf form here)
The Argonne analysis compares ethanol industry data from 2001 to 2006. In 2001, U.S. ethanol production was 1.77 billion gallons. In 2006, U.S. ethanol production was 4.9 billion gallons, an increase of 276%.
“This is not your father’s ethanol industry anymore,” said Renewable Fuels Association president Bob Dinneen. “As the industry has grown over the past several years, we have adopted new technologies, we are looking at new feedstocks, we are becoming more efficient every day. The ethanol industry takes its responsibility as stewards of the environment very seriously.”
The Argonne analysis also found key trends that are making ethanol more efficient and environmentally friendly. Nearly 25% of ethanol producers today are capturing their carbon dioxide emissions for use in dry ice production and carbonated beverage bottling. In addition, 37% of distillers grains – the high protein livestock feed co-product of ethanol production – are now sold in the wet form, reducing the energy needed to dry and transport the product.
The improvements being made in ethanol production today signal the greener direction in which this industry is moving. The development and implementation of new technologies that improve efficiencies and expand the basket of feedstocks available for ethanol production is occurring rapidly, as the Argonne analysis indicates.
Conversely, the petroleum industry is moving in the opposite direction. As all of the ‘easy’ reserves of oil have been exploited, oil producers are having to drill deeper and go further into environmentally sensitive lands in pursuit of crude. The environmental impacts of these activities are far greater than even today’s petroleum production.
In an unpredictable twist, Saudi Arabia’s Minister of Petroleum and Mineral Resources is denouncing ethanol as an alternative to petroleum-based motor fuels.
During an appearance in Paris, Minister Ali bin Ibrahim Al-Naimi said:
“Let’s be realistic, ethanol and biofuels will not contribute to the protection of the global environment by reducing (carbon dioxide) emissions, they will not increase energy security, nor will they reduce dependency on fossil fuels to any appreciable degree.�
All sarcasm aside, Minister Al-Naimi’s dismissal of ethanol is just the latest in a long line of similar remarks by those in control of the world’s oil resources. Clearly, the fact that the Energy Information Administration (EIA) estimates that increased ethanol use will help reduce US petroleum consumption 90,000 barrels per day in 2008 is beginning to strike a nerve.
Responding on behalf of the US ethanol industry, Renewable Fuels Association President Bob Dinneen challenged Minister Al-Naimi’s assertions about the energy, economic and environmental impacts of ethanol.
“For the Saudi Oil Minister to assert that biofuels are not an effective energy alternative is no different from the wolf complaining that Little Red Riding Hood was interrupting his dinner plans,” Dinneen wrote. “As a leader of a country that opposes strict limits on carbon emissions and favors continued expansion of petroleum production, it is not surprising that you express opposition to the development of biofuels.â€?
“What is also galling about your statement is the claim that biofuels negatively impact the ‘food market.’ The evidence demonstrates that the number one negative impact on the food market is the high price of your primary export – oil,” he continues. “One hundred dollar per barrel oil has driven up the cost of everything from fertilizer to diesel oil used to transport food, to plastics used in food packaging.â€?
Read Dinneen’s full letter here.
Recently, the American Bakers Association and other food processing groups have erroneously and disingenuously blamed ethanol for the rise in prices for all foods. Specifically, the bakers have cooked up a line that American farmers are now planting more corn for ethanol production at the expense of wheat acres. However, the National Agricultural Statistics Service (NASS) notes that 2007 saw the highest number of wheat acres planted in the past four years. Farmers planted more than 60 million acres of wheat last year, up more than 3 million acres from 2006. (Source: NASS Crop Production 2007 Summary report)
The two major factors driving the wheat market today are the consecutive droughts in Australia, a leading wheat producer and exporter, and growing global demand. As David Streitfield noted recently in an article in the New York Times, “Now [wheat] prices have more than tripled, partly because of a drought in Australia and bad harvests elsewhere and also because of unslaked global demand for crackers, bread and noodles. In seven of the last eight years, world wheat consumption has outpaced production. Stockpiles are at their lowest point in decades.�
“The idea ethanol production is the driving factor behind high wheat prices is half-baked,� said Renewable Fuels Association President Bob Dinneen. “American farmers increased their wheat production in 2007 at a time of poor harvests and surging demand around the globe. To single out the American ethanol producer ignores the facts.�
In conveniently coincidental attempts to discredit the benefits of domestic renewable ethanol production and use, representatives from the nation’s petrochemical, corporate livestock, and food processing industries have made frequent public statements disparaging America’s farmers and ethanol producers.
Recent comments by corporate officers from Valero, Pilgrim’s Pride, Tyson’s, Smithfield and others have portrayed ethanol as the primary cause of rising commodity and food costs. The rush to make ethanol the scapegoat for all these ills completely ignores the complexities of world agriculture and energy markets and the many factors behind higher food prices, not the least of which is the record price of oil.
“To put the blame for rising commodity, food and energy prices solely at the feet of the American ethanol industry is misleading and diversionary,� said Renewable Fuels Association President Bob Dinneen. “This kind of overheated, chicken little rhetoric is meant to distort the truth and deliberately misinform the American public. Fortunately, the American people see through these smokescreens and understand that this nation must break its addiction to oil. The consequences of failing to do so, like record oil prices well in excess of $100 barrel, are too great. Biofuels like ethanol represent the beginning of that long journey.�
Some examples of the phony claims being made by officials from these industries include: (more…)
The state that started the move toward petroleum is now joining the movement to help reduce our nation’s addiction to oil. With the cooperation of the state of Pennsylvania and the full-throated support of Governor Ed Rendell, BioEnergy International is breaking ground on the state’s first ethanol biorefinery.
Located in Clearfield, the facility, once completed, will produce 110 million gallons of ethanol annually. Beginning as a corn-based ethanol production facility, BioEnergy will also conduct onsite research and testing to integrate cellulosic ethanol production technology into its operations. Cellulosic ethanol production is the conversion of nonfood biomass materials such as switchgrass, corn stalks, wood chips and other agricultural waste materials into fuel ethanol.
“It is apropos that the state that gave birth to the petroleum industry is now front and center in our nation’s efforts to reduce our dependence on imported oil,� said RFA President Bob Dinneen. “Led by Governor Rendell and the forward-thinking leaders of the state, Pennsylvania is poised to capitalize on the productivity of its farmers to supply a wide range of feedstocks for an ever-evolving domestic ethanol industry. As a result, rural Pennsylvania will see the kind of economic opportunities witnessed by countless small communities across the country and our nation will be another step closer toward energy self-sufficiency. I congratulate Governor Rendell, the people of Pennsylvania, and BioEnergy International for working constructively together to bring the benefits of ethanol production to mid-Atlantic.�
The latest report from the Energy Information Administration (EIA) concludes that ethanol will reduce U.S. petroleum demand by 130,000 b/d in 2008.
According to the EIA’s Short-Term Energy Outlook:
“The slowing economy combined with high petroleum prices is expected to constrain growth in U.S. consumption of liquid fuels and other petroleum products to just 40,000 barrels per day (bbl/d) in 2008. After accounting for increased ethanol use, U.S. petroleum consumption falls by 90,000 bbl/d.�
This news from EIA comes at a time of decreasing U.S. petroleum production and an unabated rise in world oil prices that shows no sign of slowing down. Continued geopolitical instability, growing demand from emerging nations like China and India, and a weakening dollar are all contributing to the meteoric rise of oil prices. EIA estimates crude oil will average $94 a barrel in 2008, up from $72 a barrel in 2007.
“America’s ethanol industry is living up to its end of the bargain by helping reduce petroleum use and moderate prices for Americans at the pump,� said Renewable Fuels Association President Bob Dinneen. “The nearly 8 billion gallons of ethanol being produced on an annual basis today is a vital component of our nation’s gasoline supply, adding volume and helping to mitigate the price increases that will occur as oil continues its meteoric rise.�
RFA congratulates White Energy on the celebration of the grand opening of their 100 million gallon per year ethanol biorefinery near Hereford, Texas Saturday. The facility will employ 40 full-time employees and use 36 million bushels of corn and milo per year, almost all of it grown locally.
“Expanding ethanol production outside the traditional areas is critical to the continued growth of this industry,� said RFA President Bob Dinneen. “No longer are Midwesterners the only Americans to realize the benefits of renewable fuels. Texas is now moving beyond the petroleum industry towards a more sustainable energy future. Congratulations to White Energy and the people of Texas on beginning production at this new facility and for their commitment to helping set America on a path toward greater energy independence.�
The more than two million head of livestock in the area will also benefit from the ethanol plant. The plant produces more than 830,000 tons of distillers wet grain, a co-product of the ethanol process. Distillers grains are a nutrient-rich animal feed returning value and supply back into the feed markets.
In addition to this newest plant, White Energy owns and operates two ethanol production plants: a 50-million-gallon plant in Russell, Kansas and a 110-million-gallon plant scheduled to begin operation in 2008 in Plainview, Texas.
Following the release of two narrowly-crafted reports seeking to demonstrate worst case scenarios with respect to the impact of biofuels production on global warming, scientists from the Department of Energy’s (DOE) Argonne National Laboratory and others from several universities around the country are calling into question the assumptions and conclusions of the researchers who published their findings last week in Science.
Dr. Michael Wang of Argonne’s Transportation Technology R&D Center and Zia Haq of the DOE’s Office of Biomass Program today sent a letter commenting on those reports. In a response posted on Argonne’s website, Wang and Haq note: “There has also been no indication that U.S. corn ethanol production has so far caused indirect land use changes in other countries because U.S. corn exports have been maintained at about 2 billion bushels a year and because U.S. DGS exports have steadily increased in the past ten years.�
Wang and Haq conclude: “While scientific assessment of land use change issues is urgently needed in order to design policies that prevent unintended consequences from biofuel production, conclusions regarding the GHG emissions effects of biofuels based on speculative, limited land use change modeling may misguide biofuel policy development.�
Read the complete letter here.
Others are also questioning the studies, RFA found.
Dr. Lou Honary, Director of the National Ag-Based Lubricants Center at the University of Northern Iowa, notes in a letter to the editor of the New York Times:
“In technology forecasting, some predictions can be self-defeating just as others can become self-fulfilling. In this case, both reports and their projections of a pending global disaster due to inappropriate land use are overly simplistic and do not take into account many other related factors. The assumption that corn and soybeans are and will continue to be the long term source of raw materials for biofuels production is incorrect, and it is this assumption that leads us to make self-defeating projections.
Dr. Honary concludes:
“Unfortunately, scientific papers, such as those reported by Rosenthal, are based on incomplete information and create misconceptions. The fact is that biofuels are part of our energy mix of the future, and while producing biofuels with commodity crops is expensive and less desirable, research will lead to biofuel production that is more economical and even more successful as new crops and new processes are commercialized.�
Joining Dr. Honary in his caution about putting too much credibility in the conclusions of the reports is Dr. Bruce Dale. Dr. Dale is the Chairman of the Department of Chemical Engineering and Materials Science at Michigan State University. In his critique, Dr. Dale points out that this is a complex issue and not a false choice between the biofuels we have today and some utopian fuel of the future:
“Also, biofuels must be compared with appropriate alternatives. The choice is not between biofuels and some perfect, imaginary fuel. We are going to provide fuels for our vehicles, whether those fuels come from biomass, tar sands, coal, oil shale or some other source. I believe there are strong reasons to question the assumptions, data and comparisons made in these two papers.�
In an interview with Cleantech.com, Chris Somerville, director of the BP-funded Energy Biosciences Institute at the University of California, Berkeley, strongly questioned the findings of the reports. Quoting from the Cleantech.com article:
“Somerville said one of the papers’ fundamental claims, that using land for biofuels will inevitably lead to the expansion of agriculture, doesn’t have a historical precedent.
“‘In the case of cereals, over the last 50 years there’s been a doubling of demand, but there’s not been an expansion of acreage,’ he said to Cleantech.com. “‘Expanding demand has generally not led to a corresponding increase in demand for land use. I would say it’s a speculative response for a speculative paper.’�
Also raising concerns about the validity of the study, David Morris of the Institute for Local Self-Reliance issued a statement outlining what he views to be some contradictory conclusions:
“The studies usefully estimate how much carbon will be released when new land is brought into crop production,â€? says David Morris, ILSR’s Vice President and author of Ethanol and Land Use Changes. “But the authors’ declarations that ethanol increases greenhouse gas emissions, a conclusion that has made headlines around the world, is not supported, and may be contradicted, by their own data.â€?
The report notes that the vast majority of today’s ethanol production comes from corn cultivated on land that has been in corn production for generations. “Since little new land has come into production, either directly or indirectly, the current use of ethanol clearly reduces greenhouse gas emissions,� says Morris, who served six years on an Advisory Committee on biomass to the U.S. Departments of Energy and Agriculture.
Mr. Morris’s full comments are available here.
In the rush to condemn biofuels, many have chosen to overlook the clear flaws in the assumptions and conclusions of the two reports published in Science. Public policy in the United States and elsewhere around the globe must take land use changes into account as we seek to continue feeding and fueling a rapidly growing population. Such policy, however, must be based on sound science and not speculative reports that project worst case scenarios.
RFA President Bob Dinneen testified before the House Appropriations Committee Subcommittee on Energy and Water Thursday about the energy security benefits and economic opportunities that are being created by the growth of America’s domestic ethanol industry.
Dinneen stressed the important role infrastructure and technology will play in the expansion of biofuels nationwide and how America’s domestic ethanol producers are already providing significant economic, environmental and energy security benefits for the country.
In an overall environment of slowing economic growth, the U.S. ethanol industry stands out in sharp contrast. According to a report soon to be released from economist John Urbanchuk of LECG, LLC, the American ethanol industry is a job creating engine. The increase in economic activity resulting from ongoing production and construction of new ethanol capacity supported the creation of 238,541 jobs in all sectors of the economy during 2007. These include more than 46,000 additional jobs in America’s manufacturing sector — American jobs making ethanol from grain produced by American farmers.
Ethanol is also helping to stem the tide of global warming, today. The use of low carbon fuels like ethanol is reducing greenhouse gas emissions from the more than 200 million cars on American roads. The 9 billion gallons of ethanol we will produce in 2008 will reduce greenhouse gas emissions by more than 14 million tons, or the equivalent of taking 2.5 million vehicles off the road. These benefits will only increase as new technologies, new feedstocks and new markets for renewable fuels are created.
Read the entire testimony here.
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