Branstad asks EPA to keep ethanol mandate

Source: Dan Piller, Des Moines Register • Posted: Thursday, August 23, 2012

Governor Branstad’s Letter to Administrator Jackson  Branstad RFS Letter FINAL

Waiving fuel standard would show policy is ‘risky,’ he says in a letter.

Iowa Gov. Terry Branstad urged the administrator of the U.S. Environmental Protection Agency to retain the Renewable Fuel Standard, which is the basis for the demand for ethanol.

Livestock interests, angered by high corn prices and blaming ethanol and its use of about 40 percent of the nation’s corn crop, have asked the EPA to waive the mandate.

In his letter, Branstad said “a decision by EPA to waive the RFS would signal that U.S. renewable fuels policy is risky.”

The mandate, originally passed by Congress in 2005, will require that the U.S. use up to 13 billion gallons of ethanol this year, about 10 percent of the nation’s total gasoline consumption.

Livestock interests have complained that the mandate drives up corn prices, which have reached a record $8.42 per bushel this summer because of the drought. Corn closed down 4 cents per bushel at $8.34 Wednesday on the Chicago Board of Trade.

“While the drought has presented livestock producers with challenges, a waiver to the RFS is not an appropriate response,” Branstad said.

Iowa is the leading producer of ethanol, with 41 refineries that in 2011 generated about 3.7 billion gallons of the biofuel and about $15 billion in revenue.

Branstad addressed the food vs. fuel argument against the mandate, noting that “nearly one-third of the corn used in ethanol production re-enters the market as high protein animal feed.” He said distillers grains are providing more than 20 percent of a cattle’s diet.

The EPA this week opened a 30-day public comment period on whether to waive the Renewable Fuel Standard. The agency is required to make a decision in 90 days. The governors of Arkansas and North Carolina as well as several congressmen have requested the EPA waive the mandate.

Ethanol uses about 40 percent of the nation’s corn crop. On Wednesday the U.S. Department of Energy reported that for the week ending Aug. 17, the ethanol industry produced 823,000 barrels per day, down from 904,000 barrels per day a year ago.

At least six ethanol plants have closed as margins have tightened for ethanol producers with the rise in corn prices.

Despite the loss of the 45-cents-per-gallon blender tax credit that expired on Jan. 1, demand for ethanol has remained constant. Ethanol now sells for about $2.65 per gallon wholesale, well below the $3.11-per-gallon price of wholesale unleaded gasoline.