Governors' Biofuels Coalition

Letters sent to congressional leaders this week by the Governors’ Biofuels Coalition offer well-articulated and distinct reasons for manufacturers, businesses and vendors along the biofuels supply chain to take a vested interest in the debate occurring on Capitol Hill over the federal Renewable Fuels Standard (RFS).

In the coalition’s letters to Senate Majority Leader Harry Reid (D-NV) and House Speaker John Boehner (R-OH) – and copied to key congressional committees and Cabinet members – the 30 state chief executives note the “tremendous positive economic impact” of the RFS and assert the standard “remains an important policy framework to support the national production of biofuels for years to come.”

In the face of recent well-funded, unrelenting and false attacks on the RFS, the governors, who see firsthand the beneficial impact the standard has on their states, sent the letters to “set the record straight.”

What has the RFS done since it was adopted in 2005, then updated in 2007? It is smart policy that has reduced the nation’s dependence on foreign oil, eliminated much of the uncertainty that comes with periodic oil spikes and diversified the nation’s energy portfolio. The RFS also has reduced environmental and health impacts of transportation fuels, maximized value-added opportunities for agricultural products, and created jobs and raised incomes in rural America.

The RFS has increased production of U.S. biofuels from a fraction of the fuel market in 2005 to the gasoline equivalent of 2 million barrels of oil a day in the form of clean, high octane, renewable fuel. The standard has helped reduce the course of U.S. dependence on foreign oil, dropping the share of the U.S. oil supply coming from foreign sources from over 60 percent in 2005 down to just more than 40 percent last year.

The economic benefit of biofuel plants constructed to meet the demands required by the RFS has been dramatic in the states the governors lead. The coalition cites a North Dakota State University analysis that shows a single cellulosic ethanol plant will result in a one-time investment of $176 million, $74 million in annual operation expenses, $36 million in annual non-grain feedstock purchases, the employment of 77 workers at the plant, and support for 2,400 secondary jobs. That’s a $183-million contribution to each state’s economy each year, underscoring why states as diverse as Iowa, Nebraska, Kansas, Illinois, Oregon and Florida have provided hundreds of millions of dollars in loans and incentives matched with state and national policies such as the RFS.

The importance of maintaining strong biofuel production in this country was also underscored for the governors in a briefing presented at the coalition meeting this week by 25x’25 Project Coordinator Ernie Shea. He highlighted a growing body of evidence showing that aromatic hydrocarbons – chemical compounds that make up 20-30 percent of a gallon of gas and provide octane and suppress premature combustion – pose human health risks. Aromatics do not entirely burn in combustion engines and subsequently produce ultra-fine particles that can be inhaled, particularly in urban areas. Health studies link gasoline aromatics to a wide range of health problems, including asthma, endocrine disruptions, diabetes, autism and cancer.

With Shea and others urging the governors to broaden public awareness of the aromatics issue, coalition members indicated they would push EPA to aggressively enforce limits on aromatics in gasoline as another means to demonstrate the need to boost the production of biofuels.

The 25x’25 Alliance shares in the governors’ belief that benefits from the growth of biofuels, including biodiesel, should continue – and will continue as long as Washington maintains consistent policy signals like a strong RFS.

Stakeholders, including those along the biofuels value supply chain, understand that uncertainty created by modifications proposed by some lawmakers to the RFS based on misinformation has made investment more difficult and weakened the market for biofuels. This volatility comes despite falling biofuels production costs brought about by private sector innovation.

The Alliance encourages the full range of chain partners who have benefited from the growth of the biofuels industry join in the effort to dissuade lawmakers from making any changes to the RFS. As pointed out by the governors in their letter to Congress, “continued expansion of our domestic biofuels industry through a strong Renewable Fuels Standard is essential for the nation’s energy and economic future.”

 

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