Ethanol industry plans its defense in battle over mandate

Source: By David Hendee, WORLD-HERALD STAFF WRITER • Posted: Friday, August 10, 2012

As historic drought withers the nation’s corn crop, the U.S. ethanol industry is pumping up a high-octane defense of a federal mandate that requires use of corn-based fuel.

About 250 industry leaders meeting in Omaha anticipate grim news from drought-stricken cornfields when the U.S. Agriculture Department releases its monthly crop production forecast today.

But siphoning away a requirement designed to reduce both emissions and dependence on foreign oil would be a rash action to a short-term problem, said Lars Herseth of Houghton, S.D., president of the American Coalition for Ethanol.

The organization, which represents more than 200 biorefineries in 29 states, is holding its annual conference at the Omaha Hilton. U.S. Agriculture Secretary Tom Vilsack, a longtime supporter of the ethanol industry, is scheduled to address the group today.

Brian Jennings, executive vice president of the coalition, said the industry is prepared to take the offensive and tell its story of creating jobs and keeping down the price of gasoline at pumps.

Critics say ethanol is a factor in the price of corn going from an average $2.15 a bushel in the 1997-2006 time period to more than $8 today. Some ranchers and livestock farmers are demanding that the U.S. Environmental Protection Agency waive production requirements for corn-based ethanol.

More than 150 members of the U.S. House of Representatives, mostly Republicans representing poultry, cattle and dairy states, sent a letter to the EPA urging a waiver. Twenty-five U.S. senators, about evenly divided by party, wrote a similar letter earlier. No Nebraska or Iowa member of Congress signed the letters.

The waiver demands are not justified, Jennings said.

“The drought’s the problem, not the Renewable Fuel Standard,’’ he said.

The rule requires 13.2 billion gallons of corn-based ethanol to be produced this year, and 13.8 billion gallons next year. The target can be adjusted for economic or environmental reasons

“Waiving the (standard) won’t make it rain,’’ Jennings said. “Waiving … won’t rescue corn prices in any material way.

About 40 percent of the nation’s corn crop goes to ethanol refineries, but about a third of the ethanol corn is refined into high-value animal feed called dried distiller grain. About 36 percent of the nation’s corn is used for livestock feed. The rest is divided between processed food and exports.

Jennings said that ethanol companies are responding to the corn crunch — and resulting high-priced corn — by reducing the amount of fuel their facilities produce.

The nation has roughly 800 million gallons of fuel ethanol in storage.

Jennings said policymakers need to be reminded of the benefits of fuel ethanol production — jobs in rural America that can’t be outsourced and falling dependence on foreign oil.

“We need the grass roots to stand up and speak out for ethanol to get the edge we need against Big Oil,’’ he said.

This report includes material from the Associated Press.