Advocates gear up to defend renewable fuel standard

Source: Julia Pyper, Tiffany Stecker, E&E reporters • Posted: Friday, February 8, 2013

Advocates for the biofuel industry are sharpening their swords and ginning up support for the federal mandate on biofuel blending in anticipation of a new round of attacks from the oil and gas industry.

Under the renewable fuel standard (RFS), refiners are required to mix 36 billion gallons of biofuel with traditional transportation fuel by 2022. Of that amount, 21 billion gallons is to come from advanced biofuels, such as cellulosic ethanol.

The oil and gas industry has waged a war against the RFS, citing the shortage of advanced biofuels and impossible-to-meet blending targets. In preparation for a renewed debate over the program, supporters defended the mandate for its energy security, economic and environmental benefits yesterday at the American Council on Renewable Energy (ACORE) Policy Forum on Capitol Hill.

“Congress called on us, the private sector, to make these investments when they created the renewable fuel standard,” said James Collins, president of DuPont Industrial Biosciences, which has sunk billions of dollars into developing, demonstrating and commercializing cellulosic ethanol. “What are we calling on Congress to do with that policy now?” he said. “To put it simply, stay the course.”

Last November, DuPont broke ground on a 30-million-gallon-per-year cellulosic ethanol plant in Nevada, Iowa, that makes fuel from corn stover, or stalks. When the biorefinery is complete in 2014, it will be among the first and the biggest facilities in the world to make renewable fuel from non-food agricultural sources

More broadly, the biofuels industry creates jobs, provides a solution for plant residue management, drastically reduces greenhouse gases and can displace imported fossil fuels, which boosts energy security, Collins said.

“We cannot understand why there are so many voices that are against something that does so much good in so many areas,” he said.

Retired Vice Adm. Dennis McGinn, president of ACORE, argued yesterday that old arguments against renewable fuels don’t stand up anymore. McGinn called the common critique that corn and soybean biofuels compete with food crops and raise food prices “a false debate.”

“I’d argue the real food-versus-fuel dilemma is when the price of oil goes up and cascades the costs of producing food globally,” he said, since the agriculture industry relies heavily on petroleum. “That is really the essential food-versus-fuel argument.”

A new mandate, a new attack

The first RFS-related bill of the 113th Congress was introduced yesterday by Reps. Gregg Harper (R-Miss.) and Jim Matheson (D-Utah). The bill would force EPA to base its annual cellulosic targets on actual output levels, rather than goals. Even before yesterday, opposition to the program had been building on momentum gained last year.

In the middle of last summer’s drought, a coalition of livestock trade associations said that the combination of government-backed ethanol production and lower corn yields from the drought was driving up corn prices. Two governors of livestock-producing states petitioned EPA to waive the federal renewable fuel standard for ethanol. EPA denied the petition in November for lack of evidence that a waiver would lower corn prices (Greenwire, Nov. 16, 2012).

Opposition to the RFS has created a coalition of strange bedfellows in Washington, with oil and gas companies, environmentalists, food security advocates and motor vehicle associations joining together to dismantle the mandate. On Monday, representatives from these groups held a conference call to remind the public of the concerns with increasing the production of biofuels.

“By encouraging farmers to plow up wetlands and grasslands, the corn ethanol mandate is causing more carbon to be released into the atmosphere, causing more fertilizers and pesticides to wash off farm fields and destroying more habitat that supports wildlife — and millions of jobs,” said Scott Faber, vice president of environmental affairs for the Environmental Working Group, one of the parties on the conference call and a vocal critic of the RFS.

While the Environmental Working Group focuses its opposition on the corn ethanol mandate of the RFS — 16.55 billion gallons for this year — American Fuel and Petrochemicals Manufacturers (AFPM) criticizes the cellulosic fuel portion. Last week, EPA announced a production mandate of 14 million gallons of cellulosic fuel for 2013, one week after a U.S. Circuit Court of Appeals ruled that EPA had to set more realistic, not optimistic, targets.

“We are disturbed that EPA is mandating 14 million gallons of cellulosic ethanol when zero gallons are available for compliance as of today,” said Charles Drevna, president of AFPM, who with the American Petroleum Institute sued EPA last year for setting too-high cellulosic goals. EPA fines oil companies that do not blend the annual requirement of biofuel in their fuel supply.

“The RFS is a consumption mandate, not a production mandate,” said Drevna on the conference call. “Our members are the obligated parties.”

Defenders with political muscle

Rep. Steve King (R-Iowa), whose district leads the nation in ethanol production, said he was unprepared when opponents targeted the 5-cent-per-gallon blender credit on E10 gasoline that lasted from 2005 to 2011. “I didn’t see it coming early enough,” he said.

Now, he’s on guard for renewed opposition to the RFS. “You have to be ever vigilant,” King added.

The ethanol industry has matured and is in a position to compete in the marketplace, said King. But market access remains a significant barrier.

“When you’ve got a product and you want to sell it, and the only place where you can sell that product is at a gas pump, and the petroleum industry controls the nozzle at the gas pump, they’re not going to let you into that market … unless it’s very lucrative for them,” he said. “And that’s where the government had to step in.”

The RFS provides the stability necessary for risk capital to enter the biofuel market and production to scale up. But without it, that stability disappears and the industry could collapse.

A call to arms for renewable energy, and biofuels in particular, is more urgent today than when the industry fended off attacks against the RFS last fall, said Jim Greenwood, president and CEO of the Biotechnology Industry Organization.

“This is pretty simple. Maintain the RFS and we continue to attract billions of dollars to invest in more plants so we can look to a future of greater energy security, more jobs and cleaner fuels,” he said. “Or kill the RFS and go backwards.”

Biofuels grew to make up 10 percent of the transportation fuel mix over the last decade, and they have the potential to produce up to 50 percent of the fuel supply, said Jeff Lautt, CEO of the biofuel company Poet.

Poet launched a joint venture with biotechnology company Royal DSM to launch Project LIBERTY, a cellulosic ethanol plant in Emmetsburg, Iowa, slated to begin operation at the end of the year.

In addition to combating global climate change and bolstering national energy security, growth in the biofuels sector has helped revitalize rural communities, he said. “It’s lifted rural America out of poverty.”

“They also recovered [from the] recession very well, and a lot of it, I think, has to do with that vibrant economy that has been burgeoning over the last decade,” Lautt said. “So I think we need to continue the course.”