Biofuels Grow In Spite of Political Headwinds

Source: By Dan Looker, • Posted: Wednesday, January 31, 2018

Ethanol and biodiesel plant leaders gathered at the Iowa Renewable Fuels Summit in Des Moines, Iowa, Tuesday had much to celebrate. The ethanol industry exported a record 1.3 billion gallons of the fuel last year. In this country, President Donald Trump kept his word to support the Renewable Fuel Standard (RFS), the federal mandate that requires oil companies to blend biofuels into their products.

That success didn’t come easy, especially in Washington, where biofuels lobbyists fought efforts by EPA Administrator Scott Pruitt to weaken or roll back the RFS. Even after several key victories, industry leaders expect more opposition.

“We have a tough year ahead of us. Our success has caused the oil industry to step up their attacks,” Emily Skor, CEO of Growth Energy told the group.

The bankruptcy filing this month by Philadelphia Energy Solutions, the East Coast’s largest oil refinery, is being used to urge EPA to weaken the RFS through an exemption for small refiners. Trade groups are also attacking the labeling of E15 at gas pumps. And Texas Republican Senator John Cornyn is leading an effort to draft legislation to change the RFS.

Cornyn hasn’t introduced any legislation yet, which might relieve biofuels supporters who are skeptical of how it might benefit their industry.

“It’s going to be tough to see where this goes, particularly on as issue that divides the Republican caucus, in an election year,” Skor said.

Meanwhile, the ethanol industry forges ahead to build markets. Trade missions are helping promote exports of the fuel. Skor is hopeful that, in spite of tariffs on imported ethanol, a new mandate to sell 10% ethanol blends in all of China by 2020 will boost exports to that country even more.

“The reality is, we’re producing the cheapest octane on the planet,” Skor said.

That has prompted another buyer of U.S. ethanol, Brazil, to impose a 20% tariff on ethanol imports. But already Brazil’s agriculture minister, Blairo Maggi, proposed dropping the tariff, in exchange for ending a ban on fresh beef exports from Brazil to the U.S.

Iowa State University economist Chad Hart, who spoke about the economic outlook for ethanol, said ethanol is much stronger than biodiesel and cellulosic ethanol. The conventional ethanol industry, mostly based on corn, has grown at about 3% a year.

“When I look at corn-based ethanol, you’ve seen that industry mature….to where it is very cost competitive now,” Hart said.