Obama admin stands by ethanol as RFS debate heats up

Source: Amanda Peterka, E&E reporter • Posted: Wednesday, September 11, 2013

The Obama administration today vowed to continue supporting renewable fuels against attacks from the oil industry as Congress returns to debate the federal biofuel mandate.

In a speech to ethanol producers, Agriculture Secretary Tom Vilsack said President Obama was strongly behind the industry and would oppose congressional action to change the renewable fuel standard (RFS). He chastised oil companies for putting up roadblocks to distributing more ethanol into the marketplace and said he was frustrated over the arguments against biofuels.

“There’s no need for Congress to intervene with this,” Vilsack said. “There’s no need for Congress to try to rewrite this renewable fuel standard. They got it right the first time.”

The 2007 RFS requires that refiners blend 36 billion gallons of biofuels into the nation’s motor fuel supply a year by 2022. More than half that amount, or 21 billion gallons, is required to come from next-generation fuels that do not use corn starch as a feedstock.

The standard has been under pressure from the oil industry, livestock groups and environmentalists since last year, when drought drove the price of corn through the roof and U.S. EPA gave final approval for a higher blend of ethanol to be sold and used in cars. Detractors say that increased ethanol use under the standard is displacing land that could be grown for food production and that higher blends, such as the 15-percent-ethanol-and-85-percent gasoline that EPA approved, could cause engine damage in popular cars.

Oil groups also warn that the standard is forcing them to breach the “blend wall,” or the technically feasible limit of ethanol that can be blended in today’s fueling infrastructure.

Before the five-week congressional recess, the House Energy and Commerce Subcommittee on Energy and Power held three hearings on the standard that drew stakeholders from all sides of the debate, including biofuel backers who argued that the RFS is reducing U.S. reliance on foreign oil and decreasing greenhouse gas emissions.

Vilsack — a former governor of Iowa, the nation’s top ethanol producer — slammed RFS detractors, saving his harshest criticism for the oil industry. He accused oil companies of wanting the biofuel manufacturers to fail so that they could buy up ethanol plants.

“The reality is, the petroleum industry needs octane, and they understand and appreciate the value of ethanol in terms of providing octane,” Vilsack said, referring to the standard rating of the performance of a fuel.

“That leads me to believe, and this is something that is a personal opinion … I think the industry understands the importance of ethanol, they understand the importance of renewable energy, and what they would really like to have happen is for this industry not to succeed so all those production facilities can be made available for 10 cents on the dollar.”

The oil industry and other RFS opponents, he said, were actively putting up roadblocks by trying to halt the Agriculture Department from funding the installation of gas station pumps capable of blending higher levels of ethanol in gasoline.

“I don’t think it’s unusual that those who oppose this industry are making it very difficult for the USDA to continue to provide financial support for blender pumps and for distribution systems,” Vilsack said. “They don’t want those distribution systems because they know if those distribution systems are there, people will use them. And more ethanol and more renewable fuel will be sold. And that’s a competition issue.”

RFS lobbying revs up

Although Syria is front and center as lawmakers return to Washington, D.C., this week, the debate over the RFS is nonetheless ramping up behind the scenes.

Lawmakers have been back in session for barely a day, and already biofuels supporters are roaming Capitol Hill knocking on their doors to urge them to leave the RFS in place amid pressure from the oil industry to repeal it. A select group of House Energy and Commerce Committee members continues to work on drafting legislation to amend the mandate, committee spokeswoman Charlotte Baker said yesterday, while the Senate Environment and Public Works Committee is gearing up to hold a hearing of its own in the fall.

House Majority Leader Eric Cantor (R-Va.) is pushing to include an RFS bill this fall on a larger must-pass piece of legislation to address the debt, according to those close to the debate. It’s unclear yet, though, whether such a tactic will get support in the House.

Bob Greco, the American Petroleum Institute’s director of downstream activities and the group’s point person for renewable fuels issues, yesterday expressed confidence that reform efforts were progressing.

“We’ve actually seen more interest in addressing the RFS,” Greco said. “We’ve increased contacts to members of Congress and the administration, and we think the White House and Congress is getting the message.”

Biofuels industry supporters of the RFS, though, say their position is strengthened by several factors that played out over the August congressional recess.

Over the recess, both the price of corn and the price of renewable fuel credits dropped, and early last month, EPA indicated that it would take steps to use its authority next year to lower the renewable fuel targets to address the blend wall issue and lower its advanced biofuels goals to account for less cellulosic ethanol produced than projected under the standard. Last week, the agency sent its 2014 proposal to the White House for review; EPA is working toward a Nov. 30 deadline to release its targets for next year.

Biofuels lobbyists working congressional offices say that the agency’s position shows that it has the authority to address issues with the standard without legislation.

“They are utilizing the flexibility that the RFS has in a way that reflects the marketplace reality,” Bob Dinneen, president and CEO of the Renewable Fuels Association, said late last week.

Oil industry groups, which filed a waiver request with EPA last month to compel it to lower its renewable fuel targets, say that EPA action is merely a short-term fix and that legislation is needed.

“This is the time for Congress to address this,” Greco said. “There will always be other issues that Congress needs to address. Clearly fuels, energy security should be at the top of the list. Congress can and should address it this fall.”