Ricketts, Reynolds rally against feds’ plan for ethanol cut

Source: By Russell Hubbard / World-Herald staff writer • Posted: Monday, August 3, 2015

In a seldom-seen cross-border stand in support of ethanol, the governors of Nebraska and Iowa on Friday urged an embrace of the corn-derived motor fuel as a crucial local industry with vast economic development prospects for all Midwesterners.

Nebraska Gov. Pete Ricketts and Iowa Lt. Gov. Kim Reynolds joined forces Friday at a rally in Blair, Nebraska, at an ethanol-industry plant. They told people they should urge the U.S. Environmental Protection Agency to abandon plans that would slash billions of gallons of ethanol from the nation’s motor fuel supply.

“Agriculture is Nebraska’s No. 1 industry, and ethanol is one of the key agricultural growth industries that have added billions in revenue and thousands of jobs over the past decade to our state,” said Ricketts, speaking at the Blair plant of Danish company Novozymes, which makes additives that allow ethanol producers to get more energy from corn.

Proposed EPA changes to the renewable fuel standard, known as RFS, are now threatening investment in the ethanol industry in Nebraska and Iowa. They’re the two top ethanol-producing states, with 24 plants in the Cornhusker State and 42 across the eastern border. EPA proposals would cut the amount of ethanol that refiners blend into gasoline.

In response, the Nebraska and Iowa state leaders have crafted a combined message on the role of ethanol in their economies, attempting to position it as not only an inexpensive fuel additive, but also as a highly scientific, job-producing economic powerhouse native to Nebraska and Iowa and one that should be as much of a source of hometown pride as oil is in Texas or tourism in Florida.

“This is renewable energy that comes from us, not the other side of the world,” Ricketts said.

Todd Sneller, administrator of the Nebraska Ethanol Board since 1979, said Nebraska and Iowa governors have occasionally teamed to promote ethanol, notably as part of the Governor’s Biofuels Coalition, which dates to 1992. Still, he said, it is highly notable that the chief executives have taken an open and public stand in an attempt to educate people about the industry’s prospects.

“It really is a different era today,” Sneller said. “These governors understand the enormous economic impact of ethanol.”

Global chemicals and refining giants such as E. I. du Pont de Nemours and Co., Sneller said, are active investors in ethanol and leaders in the scientific quest to produce the fuel from waste products such as that from wood and crops.

Such endeavors require billions of dollars in research, billion-dollar plants and enviable rural payrolls. In Nebraska, ethanol plants directly employ 1,300 people at an average wage that is 21 percent higher than the state’s average manufacturing wage, according to an economic impact analysis this year by the University of Nebraska-Lincoln.

“It has been made more than clear there are massive amounts of capital available if the public policy is in place to support those investments,” Sneller said.

There is indeed danger lurking. This year, the EPA proposed that gasoline refiners blend 17.4 billion gallons of renewable fuels in 2016, almost all of it from corn.

That is well below the 22.3 billion-gallon target set by Congress via the 2007 law passed to encourage renewable fuel development. The final RFS ruling is to be released later this year.

Certainly, there are ethanol critics who say the RFS should be scrapped altogether.

Criticisms include that ethanol damages small engines, is subject to government subsidy via the RFS and that its lower energy content than clear gasoline lessens gas mileage. Many say exotic forms of ethanol, such as those envisioned from grasses and weeds, are nothing but a pipe dream that has cost billions with nothing to show for it.

Ricketts, who said most criticisms of ethanol are erroneous and remedied by better educating the public, said the uncertainty around RFS is stunting investment in what is a $5 billion annual industry in Nebraska, according to the UNL analysis.

He said in an interview after the Blair rally attended by ag officials and Novozymes employees that the company’s Denmark-based CEO this year told him U.S. expansion plans are on hold pending the EPA’s final ruling.

“So, yes, we absolutely have proof projects are being delayed because of this,” Ricketts said.

Lt. Gov. Reynolds said the same, that a major ethanol plant expansion in her state is stalled.

Ethanol also provides another big customer for corn farmers, said Nebraska Farm Bureau President Steve Nelson. With corn prices hovering around $4 a bushel, down about half from the highs seen in 2008, farm incomes in Nebraska and Iowa are set to fall. U.S. Department of Agriculture estimates forecast a 22 percent drop nationally from last year, with Nelson saying some Iowa and Nebraska farmers might see a 50 percent reduction.

“Ethanol has never been more important,” Nelson said.

Ricketts, Reynolds and company Thursday urged people to contact their congressional representatives and the EPA to insist on full EPA compliance with the RFS.

The EPA’s public comment period for input about the proposed RFS ends Monday. The American Petroleum Institute, an oil company trade group, has consistently opposed the EPA’s ethanol blending standard.