Ethanol wins a round in its battle with oil

Source: By James Osborne, Houston Chronicle • Posted: Tuesday, July 11, 2017

Administration puts off substantial changes in policy on biofuels

The Trump administration has left the effective mandate for ethanol at 15 billion gallons.

In the long-running political fight between drillers and farmers, chalk one up for the farmers.

The Trump administration is holding off any major shift in ethanol policy, announcing last week that it would maintain the blending mandate for ethanol and other biofuels near current levels in 2018. The oil industry in recent years has lobbied to revoke or reduce the ethanol mandate, adopted during the administration of President George W. Bush as a way to reduce dependence on foreign oil when crude was in short supply and prices soared above $140 a barrel, compared with less than $50 today.

Oil and agriculture have long been at odds over ethanol, which is made from corn. The fuel slices into sales of gasoline but increases demand – and prices – for the corn grown by Midwestern farmers, and it creates thousands of jobs in rural counties.

The administration’s decision to essentially keep the blending requirement the same as last year appeared a win for the ethanol industry. The administration lowered the total requirement for all biofuels by 0.2 percent to 19.24 billion gallons 2019, but those reductions come from cellulosic and advanced biofuels in part because these technologies are not growing as quickly as earlier thought, the EPA said.

Companies have struggled to commercialize a technology many once hoped would allow yard debris and other waste to be converted into fuel – as opposed to using food crops like corn and sugar cane as ethanol producers do.

The administration left the effective mandate for ethanol at 15 billion gallons, the same as 2017.

Bob Dinneen, president of the Renewable Fuels Association, which represents ethanol producers, said that by staying the course and maintaining a strong renewable fuel mandate, “consumers will continue to benefit from the policy.”

The American Petroleum Institute had a mixed reaction to the administration’s policy. While it “welcomed EPA’s proposal to slightly lower the total biofuel volume for 2018,” the group said in a statement, the plan “does not go far enough.”

Most disappointed were makers of cellulosic and advanced biofuel.

“EPA’s proposed advanced and cellulosic biofuel volume obligations do not reflect the full potential for these innovative fuels over the next year,” said Brent Erickson, an executive vice president at the Biotechnology Innovation Organization, which represents advanced biofuel producers. “The agency continues to rely on a flawed methodology formulated by the prior administration.”

The Trump administration’s decision on the blending requirement comes as oil and ethanol battle over legislation that would lift a longtime summer ban on gasoline with higher concentrations of ethanolAlthough most retailers sell gasoline with a 10 percent concentration of ethanol, known as E-10, an increasing number are carrying a blend with 15 percent ethanol, or E15. E15 pumps, however, are required to be shut during the peak summer driving season, under a federal law designed to reduce levels of asthma-causing ozone.

A coalition of Midwestern lawmaker have introduced a bill in the Senate to lift that ban, which could further boost the market for ethanol. That move opposed by the oil industry as well as lawmakers from Texas.