Ethanol industry marks six years of success with Renewable Fuel Standard

Source: By Robert Pore, The Grand Island Independent • Posted: Monday, December 23, 2013

Concern spreads about the future of the nation’s ethanol industry because of proposed intervention by the U.S. Environmental Protection Agency (EPA) to change the Renewable Fuel Standard.

But on the sixth anniversary of President George W. Bush signing into law the Energy Independence and Security Act of 2007 (EISA), a new study shows that the RFS has provided a positive impact to the nation’s economy and environment.

An EPA proposal would significantly weaken the Renewable Fuel Standard by reducing the volumes for corn-based ethanol for 2014. Nebraska’s ethanol industry is the second largest in the nation. Much of its growth has happened in the last six years since Bush signed the EISA.

The proposed rule would cap corn-based (or conventional) ethanol at 13 billion gallons. It would cut 1.4 billion gallons from the conventional ethanol cap that was set at 14.4 billion gallons.

The EPA proposal comes at a time where corn prices have declined from its record highs last year that were brought about by the drought that impacted production in the nation’s Corn Belt. Along with lower corn prices, a record corn crop was harvested this year. Both the lower prices and increased corn supply would have increased ethanol production and added value to Nebraska’s economy. The state has more than 23 ethanol plants in operation, many of which had to temporarily shut down or lower production when corn prices were high and supplies were tight.

According to the U.S. Energy Information Administration, ethanol production earlier this month in the nation reached a 23-month high. The four-week average for ethanol production stood at 928,000 barrels per day for an annualized rate of 14.23 billion gallons.

According to the Renewable Fuels Association (RFA), EISA was passed by the Senate on a vote of 86-6 and the House on a vote of 314-100. The centerpiece of EISA was the greatly expanded Renewable Fuel Standard (RFS).

According to the RFA, that new RFS required “rapid growth in the consumption of renewable fuels, culminating in 36 billion gallons in 2022. In addition, the law required renewable fuels to meet certain environmental performance thresholds and created specific categories for cellulosic and advanced biofuels.”

In a signing ceremony at the Department of Energy, President Bush said, “Today, we make a major step with the Energy Independence and Security Act. We make a major step toward reducing our dependence on oil, confronting global climate change, expanding production of renewable fuels and giving future generations a nation that is stronger, cleaner and more secure.”

According to Bob Dinneen, president and CEO of the RFA, in the six years since Bush signed the EISA into law, “tremendous progress has been made toward achieving the original objectives of the expanded RFS. Renewable fuel production and consumption has grown dramatically.”

“Dependence on petroleum — particularly imports of refined products — is down significantly,” Dinneen said. “Greenhouse gas emissions from the transportation sector have fallen. The value of agricultural products is up appreciably. And communities across the country have benefited from the job creation, increased tax revenue, and heightened household income that stems from the construction and operation of a biorefinery.”

According to the report “Celebrating Six Years of The Renewable Fuel Standard” that examines how the world has changed since passage of the expanded RFS in 2007, the number of ethanol plants in the U.S. has increased by 90 percent to 209, helping to increase ethanol production by 104 percent or from 6.52 billion gallons to 13.3 billion gallons. Nebraska has more than 23 operating ethanol plants that have a production capacity of more than 2 billion gallons of ethanol annually.

The value of ethanol industry output has grown during those six years from $17.8 billion to $42.1 billion. As a result of the development of a new market for corn with ethanol production, it has contributed to an 87.1 percent increase in net farm income from $70 billion in 2007 to $131 billion in 2013.

“Meanwhile, the doomsday outcomes threatened by opponents of the RFS simply have not materialized,” Dinneen said. “Agricultural land use continues to shrink, the Gulf of Mexico ‘dead zone’ continues to contract, deforestation rates continue to fall, and food price inflation has followed historical trends.”

He said that while “substantial progress has been made toward accomplishing the legislative goals of EISA, the RFS has just gotten started.”

“Indeed, we’re not even halfway through the revolutionary 15-year energy plan that became law six years ago today,” Dinneen said. “We must fight hard to protect the advances this country has made under the RFS toward energy independence and economic security. We are fighting for the future while Big Oil and Big Food fight selfishly to protect their profit margins.”