Governors' Biofuels Coalition

A Midwestern lawmaker yesterday chastised members of the oil and biofuel industries for not seeking common solutions to problems with a congressional mandate that the nation blend 36 billion gallons of biofuels a year into motor fuel by 2022.

As a much-hyped hearing on the renewable fuel standard hit the hour mark yesterday, Rep. John Shimkus (R-Ill.) brusquely told a panel of witnesses made up of the oil and biofuels industries’ most powerful lobbyists to stop regurgitating their talking points. He cut off Jack Gerard, president of the American Petroleum Institute, as Gerard launched into an argument and pointedly asked each member on the panel to commit to working together.

“We could have had this hearing in January and I would have gotten the same freaking answer out of you all in January that I got today,” Shimkus said. “The point is … listen and be constructive. We got sides. We know what they are. That’s not really being constructive, because we have an issue that we have to address.”

The renewable standard has been in the spotlight in Washington, D.C., since last summer, when a record drought crippled the nation’s major corn-producing regions, raising questions about the viability of corn-based ethanol. Since that time, interest groups representing many sectors of the economy have launched major lobbying campaigns both supporting and opposing the standard.

Over the last few months, the House Energy and Commerce Committee’s Subcommittee on Energy and Power has released a series of white papers that have elicited dozens of responses each from the major stakeholders in the RFS battle. Yesterday’s hearing — and a second part scheduled to take place later this afternoon — represents the culmination of the committee’s review.

While Shimkus, whose congressional district includes both refineries and ethanol facilities, was the most vocal about his frustration over the intransigence of the various parties involved in the renewable fuel standard debate, other Energy and Power members expressed similar frustration at yesterday’s much-hyped hearing.

“It has been frustrating,” said Rep. Lee Terry (R-Neb.). “You’re either in or you’re out. Nothing needs to be fixed or it’s either totally right or totally wrong. So it doesn’t leave us a lot of options.”

But finding common ground in the debate over how the federal government should stimulate the domestic biofuels industry is going to be tricky. The standard’s two main stakeholders, the oil industry and the biofuels industry, are directly at odds with each other.

The oil industry, represented by the American Petroleum Institute and American Fuel & Petrochemical Manufacturers, is advocating for complete repeal of the standard, while the standard’s most ardent biofuels supporters say Congress should not make any changes whatsoever.

“I believe to the extent there are issues with the RFS — I’ll acknowledge there are some concerns — they can be addressed administratively” by U.S. EPA, said Bob Dinneen, president and CEO of the Renewable Fuels Association.

Other interest groups from the livestock, environmental and auto industries seem more willing to look for ways to tweak the edges of, and not completely gut, the standard. Livestock and environmental interests, as well as the National Corn Growers Association, will testify today.

Several members of the Energy and Power Subcommittee said one thing seemed clear after the first part of the hearing yesterday: At this point, there’s probably not enough congressional support for completely repealing the standard.

“I would probably vote for repeal of the RFS, but I don’t just see where we’re going to get there,” said Rep. Gene Green (D-Texas).

There does, however, seem to be support in the committee for making changes to the standard to address skyrocketing ethanol credit prices and the 10 percent “blend wall,” or the technically feasible limit to the amount of ethanol that can be blended into fuel.

Michael McAdams, president of the Advanced Biofuels Association and a fixture in Capitol Hill hallways, said during the hearing and in an interview afterward that he was willing to sit down with the committee to find a path forward.

“I think it would be political malfeasance for anyone at that table not to engage with the authorization committee of the RFS statute and many other statutes that we have to on a regular basis,” McAdams said. “At the end of the day, we’re all going to have to have a civil, constructive conversation and see where that leaves us.”

But he urged the committee to at least first try approaching EPA to remedy the blend wall issue through its existing authority before taking any legislative actions.

Under the standard, EPA has the authority to set yearly targets for the different pools of biofuels contained in the standard: conventional, advanced, biodiesel and cellulosic biofuel. The latter two are subsets of the advanced bucket.

McAdams said he’s had several meetings with EPA, including one Monday, that suggest the agency is considering lowering both its proposed cellulosic target this year from 14 million gallons down to no more than 5 million gallons and its overall biofuels target for the year. The agency is expected to come out with its final proposal later this summer.

In previous years, EPA has lowered the cellulosic target more than 90 percent below what the statute requires, but it has not lowered the overall biofuels goals, leaving a gap that has been backfilled partly by biodiesel and partly by Brazilian sugar cane ethanol imports.

“I really tried to make, repeated times today, the case … that it costs nothing for this committee to come together in a bipartisan way and try to work with the new [EPA] administrator and resolve the blend wall issues, that they clearly have the ability at EPA to move the goal line” on the volume obligations, McAdams said after the hearing. “And if they did that on a broader way relative to what they’ve done in the past, it would address many of the issues that’s caused a friction between the parties at that table.”

 

Jeremy Martin, a senior scientist in the clean vehicles program at the Union of Concerned Scientists, said the statute allowed EPA to go as far as lowering the overall target to 20 billion gallons by 2022, plus whatever cellulosic biofuel ends up being produced in the country.

But lowering targets is only a temporary fix, said Charles Drevna, president of the American Fuel & Petrochemical Manufacturers, after the hearing. Drevna, who testified on the first panel, said the oil industry would continue to experience uncertainty over EPA’s targets.

When asked whether he would be open to working with the different stakeholders in the debate, as Shimkus suggested, Drevna continued to make the case for repeal.

“As an association representing a huge segment of the industrial sector of this country, we will take a look at anything they come up with, and we’ll make our comments and opinions known,” he said. “But as I said at the hearing, the law is so fundamentally flawed that we believe it’s better to repeal. And if you want to do something else, start all over.”

Gerard of API called the hearing a positive step but said he doubted there would be common ground

“It would be easy if everybody was compatible and just came together,” he said. “The problem is, it’s not that easy because you’ve got some real serious issues at stake and, we believe, some fundamental issues that have to be addressed before they affect the consumer.”

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