Impact of proposed ethanol cutback debated

Source: By Rick Barrett of the Journal Sentinel, Milwaukee JOurnal Sentinel • Posted: Monday, November 18, 2013

Wisconsin ethanol producers say a federal government proposal to require almost 3 billion fewer gallons of the corn-based biofuel in gasoline next year could be devastating to grain farmers and the renewable fuels industry.

Friday, the Environmental Protection Agency recommended reducing the amount of ethanol that gasoline blenders would have to use in 2014 — saying that nearly all gasoline sold in the U.S. already contains 10% ethanol.

“We are now at the E-10 blend wall,” the EPA said, adding that if gasoline use continues to decline with more fuel-efficient vehicles, then growth in ethanol use would have to come from higher blends.

That would be unpopular with the oil industry and engine manufacturers including Wisconsin-based Briggs & Stratton Co., Kohler Co. and Mercury Marine, a division of Brunswick Corp.

Fueling small engines with gasoline containing more than 10% ethanol could result in problems including engine overheating, fuel line ruptures, and expensive repairs not covered by warranty, according to the engine manufacturers.

Also, some in the grocery and restaurant business say ethanol mandates for gasoline have driven up their costs because the fuel additive uses massive amounts of corn.

“The Renewable Fuels Standard has wrought havoc on food retailers, restaurants, franchisees and operators, as well as food producers and suppliers. The corn ethanol mandate has artificially driven up commodity costs by billions of dollars annually and, with it, consumer prices,” the National Council of Chain Restaurants said Friday in a news release.

But ethanol producers and corn growers said they were disappointed with the EPA’s recommendation, saying it was a setback for renewable energy.

If the decision stands, it could have a huge negative impact on corn growers, said Josh Morby, executive director of the Wisconsin Bio Industry Alliance, which represents ethanol producers and grain farmers.

Corn is Wisconsin’s biggest crop, and farmers make planting decisions partly based on ethanol requirements.

“I think we are a long way from talking about closing ethanol plants…but the reality is the oil industry doesn’t want to blend ethanol. They don’t want to offer consumers an alternative to gasoline,” Morby said.

The requirement that ethanol is blended in most gasoline stems from the Energy Independence and Security Act of 2007. The EPA has opened a 60-day comment period on its proposal that’s not been finalized and seeks to require about 15 billion gallons of renewable fuels in gasoline in 2014.

It comes as the ethanol industry promotes a 15% blend of the fuel additive that’s slowly making its way into the marketplace.

Backers of ethanol say it has helped reduce gasoline prices, and that there’s plenty of corn for food and fuel.

Farm groups, including the American Farm Bureau Federation, said they were disappointed by the EPA’s proposal to curb ethanol use. Likewise, it was criticized by national ethanol interests.

“This year we are harvesting the single biggest corn crop in history, 14 billion bushels. There’s no need to be constraining ethanol production right now,” said Bob Dinneen, president and CEO of the Renewable Fuels Association, based in Washington, D.C.

Reducing the ethanol requirement would discourage investments in renewable fuels and would increase the nation’s dependence on foreign oil, according to Dinneen