Vilsack says rules on biofuels face threat

Source: DAN PILLER • Des Moines Register  • Posted: Monday, February 13, 2012

He says diluting standards could hurt Midwest interests

U.S. Secretary of Agriculture Tom Vilsack warned an Iowa group Friday in Ankeny that “the Midwest could be damaged” if oil interests succeed in weakening the federal Renewable Fuel Standard.

“Big oil is pushing back against the Renewable Fuel Standard,” Vilsack said at a forum at Des Moines Area Community College. “If they succeed, the consequences could be very serious for the Midwest.”

The Renewable Fuel Standard, established by Congress in 2005 and updated two years later, mandates use of ethanol and biodiesel by cars and trucks. It is the underpinning of demand for ethanol, which now is produced at 41 plants in Iowa with annual revenues totaling about $15 billion.

Last year, petroleum industry groups lobbied against raising the allowable proportion of ethanol in blended fuel to 15 percent, up from 10 percent. Earlier this year, the American Petroleum Institute and the Petroleum Refiners Association asked the Environmental Protection Agency to withdraw mandates for use of cellulosic ethanol, which is made from crop residue, wood chips or other biomass, because of the slowness of its development.

U.S. Rep. Pete Olsen, R-Texas, has introduced a bill that would amend the Renewable Fuel Standard to include fuels made from coal and natural gas, which is seen as a major boost for Texan T. Boone Pickens’ efforts to switch much of the U.S. truck fleet from diesel to natural gas power.

Olsen repeated the most widely heard criticism of corn-fed ethanol, saying that “the RFS’s focus on corn ethanol has translated into higher feed costs for livestock producers and higher food costs for working families.”

At a biodiesel conference last week, Charles Drevna, president of the American Fuel and Petrochemical Refiners Association, called the Renewable Fuel Standard 2, passed in 2007, “an anachronism.”

Drevna noted the unexpected surge in U.S. domestic fossil fuel production in recent years, from the Bakken oil field in North Dakota and shale natural gas fields in the Southwest, Pennsylvania, Ohio and West Virginia.

He said that in 2007, “we thought we were an energy-poor country. Since then, of course, domestic oil and natural gas deposits have been producing record amounts of fossil energy.”

U.S. Rep. Leonard Boswell, D-Ia., said Friday that the Renewable Fuel Standard is under assault in Washington. “Big oil has a lot of power. They’re working against the RFS. I hope we can hold them off,” he said.

Vilsack said he wanted the political discussion to avoid becoming a regional fight between Midwestern corn agriculture and Texas-based petroleum.

“This is why it is important to develop other sources of biofuels besides corn, so the argument isn’t just about corn and the Midwest,” Vilsack said after the meeting. “For instance, there are grasses and wood sources in the South and East that also can be developed into biofuel feedstocks.”

Corn-fed ethanol has faced political blowback because of its presumed effect on livestock feed costs. Meanwhile, cellulosic ethanol has taken a black eye because its development has been slower than it was expected to be when the Renewable Fuel Standard was updated five years ago.

Cellulosic ethanol production in the U.S. is virtually nonexistent. Two corn residue plants, at Nevada and Emmetsburg in Iowa, will be under construction this year and are scheduled to open in 2013.

Meanwhile, the Environmental Protection Agency has for the last two years been obliged to postpone guideline targets for cellulosic ethanol use by motorists. Even so, oil companies are still obliged to pay for blending credits, which has drawn industry ire.