USDA’s 30 Year Vision – No Need to Wander Like Moses

Source: By Douglas Durante, Biofuels Digest • Posted: Wednesday, February 26, 2020

As the U.S. biofuels industry struggles to regain the luster it had during the golden years of phenomenal growth, the U.S. Department of Agriculture (USDA) came out recently with a puzzling claim of a “bold new vision” for agriculture and biofuels. In the face of shrinking demand, collapsing trade markets, poor margins and constant attack by the petroleum industry, USDA presented a 10 year plan for E15 and a 30 year plan for E30 that is neither bold nor visionary and clearly suggests they need to get their vision checked.

Thirty years?  Really?  Thirty Years? I guess some might note that Moses wandered the desert for 40 years so in comparison this isn’t all that bad.  But it is when you consider E15 is here now. For that matter, so is E30. Its not hard. You put 20% ethanol on top of gasoline containing 10% ethanol. USDA says they want to achieve “market driven” blend rates, which is a curious thing for them to say since the federal government is the very thing that has blocked these blends from entering the market.

I was not invited to the announcement but if I was I would have shown them my new magic trick where I can make 30 years disappear. It’s a simple trick. Provide a list of regulatory barriers, eliminate those barriers, and abra cadabra, more ethanol appears. And with that, importantly, comes a lifeline to American agriculture and corn farmers. And more jobs. And new markets for automakers. And new tax revenue to local, state, and federal governments. And perhaps most importantly, a displacement of high carbon, polluting, and toxic fuel with clean octane.

There had to be people in the back of the line behind Moses yelling out, “Moses, dude, do you know where you are going?”  Well, that’s where we find ourselves with USDA. It was nothing short of shocking that this announcement was met with applause and cheers from too many groups that should have been offended. This would be like your boss announcing they are giving out raises, but not for 30 years. Like the folks in the back of the line with Moses, people need to ask USDA if they have any idea what they are doing when they suggest a lead time like this.

USDA is by some definition a regulatory agency but at its core it should be an advocacy agency for America’s farmers. What kind of relief and help is this? With corn prices stagnant, farm income down, farmer bankruptcies and suicides at an all time high, is this by any measure to be considered relief? It is particularly egregious when solutions are there to be had. The federal agencies should be working together for the good of the American people, and USDA has only to walk a few blocks down to Pennsylvania Avenue to coordinate with the Environmental Protection Agency to make that a reality.

Every single obstacle you can name that is keeping higher blends of ethanol out of the market is something that can be eliminated without legislation, subsidy, or legal action.  It is particularly frustrating given the Trump Administration pounds its chest as the deregulatory Administration which has been true for the fossil fuel industry but not so much for ethanol.  But wait, you say, we got E15!

True, but it came at a steep price as it defines gasoline as fuel containing no more than 15% ethanol. In our comments on that rule from CFDC, Urban Air Initiative and others we made the case that there was no reason to limit the rvp waiver to 15% since increasing volumes actually drive vapor pressure lower. But maybe that’s part of a grand plan by the fossil fuel interests running the EPA– take the next 15 years to go another 15%.

USDA should be pounding on EPA to fix this issue and the litany of others that are keeping ethanol down. There should be no limit on the amount of ethanol allowed in gasoline. And don’t tell me the automakers need 30 years to re-tool for blends up to E30. New cars could be calibrated and tweaked to be compatible with these blends in three years according to many experts. And consumers would have the choice of using these blends, as so many do now, in the legacy fleet, i.e. cars on the road today. With that we would see dramatic increases in mileage and a reduction in carbon emissions, meeting public policy goals affecting both climate change and health. If automakers see these higher ethanol blends in the market, with their high octane and low carbon pedigree, they will make these cars with compression changes and onboard computers that will shock people with their efficiency and performance.

But what else could bridge this ridiculous 30-year gap?  Plenty. EPA needs to:

  1. Establish a higher minimum octane standard for all gasoline sold in the United States. Higher octane opens the entire playbook for automakers to move to more efficient higher compression engines. A nationwide requirement assures these fuels will be widely available and launch a new generation of efficient cars that people actually want and can afford, as opposed to the misguided vision that everyone is going to go out and buy a Tesla.
  1. Approve a Mid-Level Ethanol Blend Certification Fuel:  EPA should expeditiously approve the use of a mid-level ethanol certification fuel to provide automakers with a necessary pathway to design optimized, higher compression vehicles optimized to use 98–100 RON gasoline.
  1. Comply with the Mandatory Toxic Reduction Provisions in Section 202(l) of the CAAA:  By ensuring octane does not come from the worst part of the oil barrel it would result in a market driven demand for ethanol, the highest octane blending component available today. The first step in this process is for EPA to conduct a new cost benefit analysis that will show ethanol is a healthier, cleaner, cost effective replacement for more aromatics.
  1. Correct the Agency’s Misinterpretation of 211(f) Substantially Similar Rule:  Accept that ethanol is an essential part of the fuel pool and at all levels is “substantially similar” to gasoline in emissions and performance, and in fact is superior. As with the rvp issue, there should be no cap on ethanol blends.
  1. Update and Reform the Agency’s MOVES2014 Model:  Faulty models based on faulty inputs are unfairly penalizing ethanol for emissions.
  1. Update the Agency’s Corn Ethanol Life Cycle Analysis (LCA):  Updating EPA’s woefully outdated 2010 life cycle assessment of ethanol’s carbon emissions would align their data with the more recent and widely accepted Argonne National Laboratory GREET model, allowing ethanol to be a part of the current debates on climate strategies.
  1. Reinstate Credits for Automakers Producing Engines Optimized for High Octane (EOHO) like 100 RHOS using E30: When are we going to learn a carrot is preferable to a stick……If EVs have a multiplier in terms of efficiency rating because they displace oil, why shouldn’t internal combustion engines also be incentivized to be efficient?

And a final question that is fair to ask but even easier to answer is can we make the necessary volumes of ethanol? My members, both from the agriculture and the production side, have, can, and will make it happen. Corn is abundant and inexpensive, and with growing competition from Brazil and their burgeoning corn and ethanol production, our international markets are shrinking. Our corn carryout—the amount after meeting all domestic and export demand — is more than sufficient to increase ethanol production. And with that comes corn fiber and oil extraction technologies that offer further market opportunities for American agriculture.

And no, we won’t be plowing under pristine land. Increased efficiency in corn production coupled with increased yields in the ethanol process are positioning corn ethanol as a true low carbon fuel.

Maybe if Moses had asked for directions to the promised land, they could have cut that 40 years down. Well, USDA could and should get directions from someone who actually knows where they are going, and how to get there, and it won’t take 30 years.

Douglas Durante is executive director of the Clean Fuels Development Coalition.