Comment: The president’s biggest enemy

Source: By Brent Erickson, The • Posted: Friday, September 5, 2014

Greg Nash

President Obama’s bold vision to transition the nation to a cleaner energy future is about to be derailed by one of his most potent adversaries: himself.

To the great consternation of many of the president’s critics, this year the nation will achieve the audacious goal the president set in 2011: using advanced technologies to convert corn stalks and cobs and other agricultural or municipal waste into fuel for our cars and trucks.

Indeed, this year, four state of the art facilities are coming online in Iowa and Kansas that will deliver millions of gallons of clean, renewable fuel and offer reductions in greenhouse gas emissions of 88 percent or more, compared to gasoline. More importantly, however, these four plants are just the beginning of what might be an entirely new industry in the United States — an industry that could employ tens of thousands of Americans and help us kick our addiction to foreign oil while reducing climate emissions in the transport sector.

From the moment he took office, Obama accelerated investments into advanced biofuels and offered grant and loan financing to commercial scale production facilities. Those investments appear to have paid off handsomely for the United States, as the advanced biofuel industry is poised for continued growth and private sector investment.

Enter the president’s nemesis: his own administration.

Late last year, petroleum refiners and oil companies and their allies prevailed on Vice President Biden to get the administration to reverse five years of support for the bipartisan Renewable Fuel Standard, or RFS — a policy that ensures consumers have access to clean, renewable fuels. In a stunning reversal, the administration proposed to reduce the renewable content of gasoline while increasing the amount of foreign oil and CO2 emissions.

Overnight, private sector investment in next-generation biofuels were put on hold. The four new plants — all of which were already under construction — were still completed, but companies have not committed to building any new plants in the United States. Would you invest hundreds of millions of dollars to build expanded production capacity in an industry that the government has decided to shrink?

It was bad enough that the administration proposed to slash the market for renewable fuel. But the most damaging part — and what the administration still fails to understand — is HOW it did it.

Under the law, the Environmental Protection Agency sets the target for renewable fuel production based on what the renewable fuel industry can reasonably produce. But the administration’s proposal does away with that approach and sets a dangerous new precedent, limiting renewable fuel production to whatever amount the oil industry is willing to market in its gasoline. In effect, the EPA proposed putting the fox in charge of the henhouse.

Most gasoline stations are independently owned, but the oil companies still effectively control the retail fuel infrastructure through restrictive distribution contracts that make it nearly impossible to market fuel with more than 10 percent ethanol. In a strange reversal of policy, the administration’s most recent proposal accepts this as a permanent limitation and rewards the oil industry for its anti-competitive behavior.

Even if the administration relents and raises the targets for renewable fuel, it will still be a devastating setback for the renewable fuel industry — and especially for the next-generation fuels the administration has so strongly championed — if the EPA does not return to the original intent of Congress, where RFS targets are set based on what the biofuel industry can reasonably produce.

Perhaps the president and his administration did not set out to hurt the emerging advanced biofuels industry. Biden, who reportedly played a big role in the administration’s reversal, surely did not contemplate the effect this would have on the next-generation fuels that the president has so strongly championed. But the problem they have created is much larger than they realize, and the only way to solve it is to go back to the drawing board. Splitting the difference on the numbers won’t cut it, and plays directly into the oil industry’s hands.

Adding the pumps and equipment so that a gas station can sell fuel with more than 10 percent ethanol costs, in many cases, about $1,000. The oil refining industry, having prevented retailers from installing those pumps, is now asking for relief from the fuel standard because there aren’t enough pumps. If the Obama administration gives that relief, the Renewable Fuel Standard will be eviscerated. Our addiction to foreign oil will continue, climate change emissions will increase and investment in advanced biofuels will go overseas.

During this hot summer, we hope cooler heads will prevail.

Erickson, executive vice president for the Industrial & Environmental section of the Biotechnology Industry Organization, is a leading voice in the Fuels America coalition for protecting America’s Renewable Fuel Standard.