Ethanol slowdown not enough, say mandate critics

Source: By ART HOVEY / Lincoln Journal Star • Posted: Friday, February 8, 2013

Never in the history of corn-based ethanol have so many Nebraska ethanol plants been idle.

“This would be the largest drop we’ve ever seen,” Todd Sneller of the Nebraska Ethanol Board said as he reacted to the most recent idling announcement from AGP at Hastings.

The shuttering over the weekend of AGP’s 55 million-gallon annual capacity means seven of the state’s 24 plants are out of the production picture, at least for the time being. But signs of a voluntary slowdown by the industry in response to a shrinking corn supply and other factors aren’t good enough for an array of ethanol critics headed for Capitol Hill on Tuesday.

The Environmental Working Group, Taxpayers for Common Sense and other organizations that participated in a press briefing on Monday, will urge House and Senate lawmakers to lower the mandated ethanol production in the Renewable Fuels Standard.

There also were renewed calls from those groups for the Environmental Protection Agency to issue a partial or complete waiver on all mandated ethanol production. If that sounds familiar, that’s because it was only a few weeks ago that the EPA said no to a similar request, maintaining that a waiver would have little effect on corn prices.

In fact, the most recent adjustment in the mandate is meant to increase production of renewable fuels from 13.2 billion gallons in 2012 to 13.8 billion gallons in 2013.

Continuing drought and rising food prices figured strongly in the arguments of critics of corn-based fuel.

“The Renewable Fuels Standard is a man-made crisis; the 2012 drought is not,” said Tom Elam, speaking on behalf of the nation’s poultry producers. “The combination of the two is nearly insurmountable.”

Elam, an Indiana-based consultant with FarmEcon LLC, said the price of retail turkey meat rose to a record $1.20 a pound in 2012, and eight major poultry producers have filed for bankruptcy since 2008.

“We need to inject a dose of reality into the Renewable Fuels Standard,” he said, “especially when the corn supply is depleted by historically low inventories.”

Sneller wasn’t buying it.

“We’re seeing a market adjustment,” he said, “which means less corn demand through ethanol plants.”

Cost of production isn’t the only cause of a production cutback that also extends to Ravenna, Albion, Atkinson and other Nebraska locations, he said.

“Probably the biggest factor right now is lack of demand for ethanol,” said Sneller.

That, in turn, reflects declining gasoline demand and other factors

“Drought is not a rational reason for waiving the Renewable Fuels Standard,” Sneller said.

A major factor in its existence is the clean fuels programs in major cities trying to clean up carbon monoxide pollution from vehicle emissions.

But in their litany of complaints about ethanol Monday, critics also pointed to loss of wetlands and increasing hunger and political instability in developing countries that depend on the United States’ corn exports.

Kristin Sundell of ActionAid said her recent trip to Guatemala underscored the latter point.

“I heard over and over from people who felt squeezed by the rising price of food and shrinking access to land.”

Although it’s white corn that’s more important to the human food supply there, white corn is diverted to livestock feed when yellow corn is in short supply, Sundell said.

Looking ahead, an inflexible fuel mandate and continuing drought “would be devastating,” she said.

Scott Faber of the Environmental Working Group said the national wetlands inventory dropped by 23 million acres in the past four years. That’s an area about the size of Indiana, Faber said.

That contributes to global warming and more runoff of farm chemicals into surface water, he said.

“For these reasons and others,” Faber said, “now is very clearly the time for Congress to decrease our dependence on ethanol.”