Sen. Murkowski backs calls to reevaluate biofuel mandate

Source: By Zack Colman, The Hill • Posted: Tuesday, February 5, 2013

The Senate Energy Committee’s top Republican said Monday that she is “in good company” with congressional calls to reevaluate a biofuel-blending mandate.

Sen. Lisa Murkowski (R-Alaska), the ranking member on the Senate Energy and Natural Resources Committee, joined a growing group of lawmakers Monday in saying Congress should change the renewable fuel standard (RFS).

“Let’s have the ability to pull back and say, ‘Maybe this one just didn’t work the way that we had hoped it would,’” Murkowski said during a Capitol Hill news conference detailing an energy road map she released Monday. “Let’s not be afraid to admit that we might need to reform it.”

Congress enacted the biofuel-blending standard for corn ethanol in 2005 and updated it in 2007 to include “advanced” biofuels made from non-edible feedstock. In all, it calls for mixing 36 billion gallons of renewable fuel into traditional petroleum by 2022.

The policy has faced attacks from lawmakers and outside groups, with many pushing for tweaks and others gunning for an outright repeal.

Much of the congressional conversation has occurred in the House, with the Energy and Commerce committee pledging to hold hearings on the fuel rule.

Murkowski’s comments on Monday underscored the attention the rule is now receiving in the upper chamber.

“I think I’m in good company in asking for that critical review,” she said.

A handful of environmental, spending, food security and petroleum organizations that oppose the standard are hosting separate House and Senate briefings Tuesday.

Those groups are concerned about the mandate’s effect on corn prices, agricultural land use and the ability of refiners to meet accelerating blending targets.

“There’s a broad spectrum of organizations who have concerns,” Steve Ellis, vice president with Taxpayers for Common Sense, said Monday in a joint press call with the Environmental Working Group, American Fuel and Petrochemical Manufacturers (AFPM), ActionAid and other groups.

Jim Currie, director of federal legislative affairs with the National Marine Manufacturers Association, said during the call that his organization is circulating draft legislation on the standard.

He said the bill would take care of the policy’s “unintended consequences,” echoing a term Murkowski used.

“We don’t anticipate having a problem finding supporters,” Currie said.

Charlie Drevna, president of AFPM, said the rule hits refiners by requiring them to buy credits to meet targets for fuel that is not currently produced at commercial scale. He said lawmakers should admit the forward-looking blending goals they set back in 2007 are no longer attainable.

“They should be outraged that this thing is still on the books,” Drevna said of Congress.

The biofuel industry is looking to shore up its congressional allies, as are many trade associations playing defense on various legislative and legal challenges to the mandate.

Those groups have colored the attacks on the mandate as an attempt by the oil industry to retain its market share.

The biofuel industry says oil firms are pushing back because the blending shrinks their profit margins. Fuels America, a coordinated lobbying effort for biofuel companies, estimated Monday that the oil industry “lost” more than $46 billion in 2011 because of ethanol.

On the food front, the biofuel associations have said that links between ethanol production and corn price increases are tenuous and that land use claims are exaggerated.

The Renewable Fuels Association (RFA), an industry trade group, on Monday sent around a November Energy Department study on those topics.

The Oak Ridge National Laboratory (ORNL) study noted the fuel rule had “minimal food price effects” — though it did say corn ethanol had a larger impact on food markets than advanced biofuels. It also said the rule’s economic effects on the rest of the world “are largely neutral.”

That study also concluded the effects on agricultural land use are minimal.

“The facts from the ORNL study are: the RFS is reducing oil prices, decreasing oil imports, and creating jobs and economic benefits without the rumored catastrophic effects on food prices and land use. In fact, as the study shows, the RFS barely affects food and land markets,” RFA CEO Bob Dinneen said Monday in a statement.