An uncertain Renewable Fuels Standard puts biofuels industry in limbo
The vibrant ethanol industry has survived four major political attacks by the oil industry and other groups in recent history, but this year’s broadside is the fiercest attack to date. For farmers, the stakes are high.
"Without the ability to grow from the current 10% blend to higher blends, we’ll return to the era of high government stocks and grain prices below the cost of production," says Jeff Broin, POET founder and board chairman. "This is not just an attack on ethanol; it’s an attack on agriculture."
Corn-based ethanol isn’t the only target. If the oil industry succeeds and blocks future renewable energy sources, it would curb growth of cellulosic ethanol that is just becoming a market reality, along with biodiesel. Biodiesel production has increased 26-fold since 2000.
"It’s all about market share," says Tom Buis, CEO of Growth Energy, an ethanol trade group. "Big oil doesn’t want anything higher than a 10% blend coming from renewable energy. It cuts into their profits."
The battleground is the Renewable Fuels Standard (RFS), first passed by Congress in 2005 and amended in 2007 (RFS2). The RFS-created ethanol mandates spurred rapid-fire production that tripled growth from 2005 to 2011 to reach a high of 13.9 billion gallons. This created demand for nearly 5 billion bushels of corn, making ethanol the No. 1 corn use category, bigger than livestock feed or exports. In 2012, ethanol production was 13.3 billion gallons.
Under the RFS, the ethanol mandate will increase from 13.8 billion gallons this year to 14.4 billion next year and 15 billion by 2015.
"Big oil does not want to let that happen," Buis says. "They have stated clearly that their goal is to eliminate the RFS."
All hands on deck. To do so, the oil industry is attempting to create legal and regulatory obstacles for bioenergy. Lawmakers friendly to the oil industry have introduced bills to modify or eliminate the RFS in both the Senate and House.
"We’re confident we will win this fight," Buis believes, but it is going to take an all-hands-on-deck approach by agriculture to do so, and that includes efforts by farmers. Farmers have stepped up to the plate by sending 60,000 e-mails to Congress in support of the RFS, Buis notes.
Agribusiness is also supporting the bioenergy cause. New Holland makes a contribution to Growth Energy for every piece of new equipment sold to farmers who are part of the ethanol industry.
When will the battle finally be over? "Never," Buis says. "Our opponents will never give up, but the short-term battle in Congress should be over sometime this year."
Buis acknowledges that it will take more than just the mandate to expand ethanol use, however. It will also require more gas station pumps that sell E15 and other higher ethanol blend fuels, and regulatory changes. That won’t happen overnight, he says.
- Mid-November 2013