Advanced biofuels groups challenge ethanol mandate

Source: By Christopher Doering, Des Moines Register • Posted: Thursday, March 12, 2015


Producers of advanced biofuels made from nonedible plants, waste and other materials are calling on Congress to overhaul the country’s biofuels mandate, angering makers of corn-based ethanol who worry it could irrevocably damage the renewable fuels industry.

The Advanced Biofuels Association said regulatory uncertainty, diminishing access to capital and other challenges facing its more than three dozen members make it clear that Congress needs to make sweeping changes to the Renewable Fuel Standard for their industry to thrive.

The call for change was the first sign of a fissure between ethanol producers. Until now, they have been unwavering in their message to jointly defend the RFS, a law that requires refiners to buy increasingly larger amounts of ethanol and other fuels through 2022 and mix them into the motor fuel supply. Iowa produces more ethanol than any other state.

“Eight years after its passage, it is easy to see that the RFS may be working for some, but it is only minimally helpful to advance the promise and potential of next-generation renewable fuels,” said Michael McAdams, president of the Advanced Biofuels Association. “We need to acknowledge the simple fact: that the RFS is not equally helpful to all sectors of the biofuels industry.”

Corn is used to make most ethanol. But the next generation of biofuels — such as those made from plant stalks, grasses or wood chips — have struggled to grow and only recently have gained traction through new plants including three in Iowa — a Poet-DSM facility in Emmetsburg, one by Quad County Corn Processors in Galva and a DuPont plant under construction in Nevada.

Congress put in place the existing RFS in 2007, but the oil, food, livestock and automobile industries have said the measure is flawed and have pushed for it to be rolled back or repealed.

The American Petroleum Institute, a trade group representing more than 550 oil and natural gas companies, has charged the blending levels set by Congress were too aggressive. The Environmental Protection Agency, which oversees the mandate, seemed to hint at that fact when it proposed 2014 ethanol produced from corn levels that were well below the amount initially set by Congress.

Now, the concern is that if less corn than expected is going toward producing ethanol than what Congress initially required, the incentive to invest and grow the fledgling and more expensive advanced ethanol industry could sputter.

McAdams said that instead of helping his industry, the RFS has become “one of the greatest obstacles” because of inconsistent and poor implementation.

He called for a series of legislative fixes to the mandate that include removing a loophole allowing fuel blenders to buy a waiver credit instead of using advanced biofuels, and extending support for the fuel in the law to allow the industry more time to develop.

Chad Hart, an associate professor of economics at Iowa State University, said he was not surprised to see the alternative fuels group call for a change. Unlike the established corn ethanol producers, advanced biofuels have less to lose by opening up the RFS. “This is a position that has been building up momentum over time,” Hart said.

Ethanol trade groups representing members who mostly produce the fuel from corn were quick to criticize Advanced Biofuels Association.

Tom Buis, chief executive of Growth Energy, said corn-based and next-generation biofuels are “inextricably linked” and the risky move will only create further uncertainty for the industry. “This is a shortsighted proposal that would set the entire renewable fuels industry on the path to a rollback of the RFS,” Buis said.

A group of Republican and Democratic lawmakers in the House have proposed legislation that would do away with the corn component of the RFS and cap the amount of ethanol that can be blended into conventional gasoline at 10 percent. In the Senate, there is a proposal eliminating the annual corn targets for corn in the mandate.

Supporters of reforming or ending the RFS praised the decision of the Advanced Biofuels Association. Scott Faber, vice president of government affairs with the Environmental Working Group, called it a “remarkable shift” and further evidence that the RFS has failed.

“The RFS is so badly broken that the industry the legislation was designed to develop has now thrown in the towel and asked Congress for help,” Faber said. “I don’t think there is any greater indictment of the RFS than today’s announcement.”