USDA faces criticism for efforts to fund ethanol pumps

Source: By NICHOLAS BERGIN, LINCOLN JOURNAL STAR • Posted: Wednesday, June 3, 2015

Ethanol critics are lambasting U.S. Department of Agriculture plans to help fund the building of 10,000 gas pumps dispensing ethanol blends ranging from E15 to E85.

“This is not something consumers want, but it is something they’re going to have to foot the bill for,” said Emily Cassedy, a research analyst with the nonprofit Environmental Working Group, known for its advocacy of issues involving consumer products such as sunscreen, as well as agricultural subsidies and corporate accountability.

The USDA announced late last week it would offer up to $100 million in competitive matching grants to help fund efforts to get higher blends of ethanol into consumers’ gas tanks. The funds will be used to match state-led efforts.

Agriculture Secretary Tom Vilsack said during a phone interview Tuesday the agency’s goal is to help fund up to 10,000 pumping systems.

“We know there are 17 million vehicles out there on the roads today that can handle increased blends,” Vilsack said. “The problem is they cannot find the gas because the pumping systems and the distribution systems just aren’t available.”

He said the proposal is an investment in the agricultural economy, which is suffering from low prices for commodities such as corn, soybeans and wheat. The USDA’s Economic Research Service predicted earlier this year that net national farm income for 2015 would be 32 percent lower than 2014 and hit the lowest levels seen since 2009.

Vilsack said corn prices could see further downward pressure because of the bird flu virus that has resulted in the destruction of more than 45 million chickens, turkeys and other birds. Fewer birds mean fewer bushels of corn required for feed.

“We need to make sure we are doing everything we can to help this industry,” Vilsack said.

The United States last year produced an annual record of just under 14 billion gallons of ethanol, of which 826 million gallons were exported, according to the U.S. Energy Information Administration.

Nearly every gallon of gas sold in the United States currently has 10 percent ethanol blended into it, thanks to a congressionally mandated renewable fuel standard.

Oil companies have called on Congress to scrap the mandate, saying the nation has reached a “blend wall” at 10 percent and the market will not bear more.

The U.S. Environmental Protection Agency recently proposed new targets for renewable fuels to be mixed into the nation’s fuel supply. The new targets increase annually through 2016 but are lower than targets set by Congress in 2007.

American Petroleum Institute spokesman Bob Greco questioned the wisdom of using government funds to promote higher-ethanol blended fuels and said the market should dictate sales.

“Only about 6 percent of the (U.S. vehicle) fleet can use E85 right now, and that 6 percent is only using it 0.15 percent of the time,” Greco said. “There is very low demand, because the consumer sees this fuel costs more and gives them fewer miles per gallon.”

Nebraska Ethanol Board Administrator Todd Sneller said flex fuel dispensers, which often allow consumers to pick how much ethanol they want in their gas, are more expensive than conventional equipment but would offer a diverse slate of options.

Sneller said ethanol can reduce both the price of fuel and its emissions. And the USDA’s efforts combined with state and industry funds will help remove the barrier of the initial equipment price in getting ethanol to consumers.

“The USDA’s commitment of funds for biofuels infrastructure is an important step toward increasing the availability of higher ethanol blends. USDA funds can often be leveraged in a manner that encourages additional investment in retail fueling sites that offer flex fuel dispensers,” Sneller said in an email.

A paper by the Environmental Working Group released last week questioned corn ethanol’s environmental credentials when taking into account the carbon footprint for producing ethanol.

“Last year’s production and use of 14 billion gallons of corn ethanol resulted in 27 million tons more carbon emissions than if Americans had used straight gasoline in their vehicles,” the study concluded.

The Working Group’s Cassedy, who authored the paper, said in an interview that instead of trying to force more corn ethanol into the fuel supply, USDA funds would be better spent on promoting advanced biofuels made from sources other than corn, like municipal solid waste, corn stover, switch grass and woody biomass.

“The original intent of the renewable fuels standard was to promote advanced biofuels that can reduce greenhouse gas emissions … but what we have seen is just a massive increase in corn ethanol production and only a small amount of these advanced biofuels,” she said.

USDA has invested $332 million over the past six years to accelerate research on renewable energy, ranging from genomic research on bioenergy feedstock crops to development of biofuel conversion processes and cost-benefit estimates of renewable energy production.