Peterson Withholds Support for Climate Bill Following EPA RFS-2 Rule

May 6, 2009 07:00 PM

via a special arrangement with Informa Economics, Inc.

House Ag Chairman blasts 2007 energy bill language that he says will 'kill off biofuels industry'

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

Clearly upset by the Renewable Fuels Standard-2 proposed rule released earlier this week by the Environmental Protection Agency (EPA), House Agriculture Committee Chairman Collin Peterson (D-Minn.) said Wednesday that he will not support climate legislation being considered by the House Energy and Commerce Committee. Henry Waxman (D-Calif.), chairman of the House Energy and Commerce Committee, has a goal of sending a climate-change bill to the House floor by the end of May.

Peterson linked his climate bill opposition to what happened in 2007 when Congress passed the Energy Independence and Security Act. That bill included provisions that Peterson said were included at the last minute without his knowledge, and he said those provisions are crippling the biofuels industry.

"You're going to kill off the biofuels industry before it even gets started. You are in bed with the oil industry," Peterson told officials from USDA and EPA at a subcommittee hearing on ethanol's impact on land use and greenhouse gases. "I want this message sent back down the street. I will not support any climate change bill. I don't trust anybody anymore," said Peterson, who spoke at a hearing of the House Agriculture Subcommittee on Conservation, Credit, Energy, and Research.

Background: The 2007 energy bill said that biofuels had to meet targets for reducing greenhouse gas emissions in order to qualify toward being used for meeting usage mandates. The EPA was required to analyze the greenhouse gas emissions and told to account for the land-use impacts of using food crops for biofuels.

Peterson added that his experience with the renewable fuels standard in the 2007 energy law has turned him against passing any new climate legislation, and said he has spoken earlier this week with Pete Rouse, senior adviser to President Obama, and told him "how upset I am.” He said he is afraid new climate change legislation would cause similar problems and he does not trust those who are advocating it. "I don't think we can negotiate,” Peterson said. "The people we're dealing with here, I don't think we can negotiate.” He later told reporters that it is "not worth my effort” to work with either the Obama administration and "the people here working on a climate bill.”

The White House issued a response to Peterson by Heather Zichal, deputy assistant to the president for energy and climate change. She said "there should be no question -- the Obama administration is committed to renewable fuels” and she emphasized EPA's plans to have its findings reviewed.

"We welcome an open and robust science-based discussion and look forward to working with Congressman Peterson to address his concerns," Zichal added.

Peterson said the indirect emissions provisions in the energy law were inserted without the knowledge of the Agriculture Committee, and that he has been fighting to change it ever since. Because of this experience, he said he would not support any energy or climate bill that allows EPA or any other agency any discretion to implement it. "The only way I would consider supporting any kind of climate change bill is if it was ironclad that these agencies have no ability to do any rulemaking of any kind, whatsoever,” Peterson said, referring to implementation regulations that EPA is devising in consultation with the departments of agriculture and energy.

"We have to have everything dotted and crossed, with the t's crossed, and we could be absolutely guaranteed that these folks would not get involved. I am not sure if that's possible, but if that could be done, and if they could make it possible, then maybe we could talk about it, but I am not in any mode of negotiating with anyone at this point,” Peterson said.

Peterson said the 2007 energy law singles out corn farmers with provisions that were inserted at the last minute. With that experience, "it's not worth my effort” to work with the administration of the Energy and Commerce Committee on a climate change bill, he said. "This thing is out of control,” he said.

The EPA proposed rule would cripple the nascent industry to produce advanced biofuels from biomass like switchgrass and cornstalks, Peterson said. "If you think you are going to get investment in next-generation biofuels, you are kidding yourselves,” he said.

EPA response: The emissions reductions required by the 2007 energy law will not affect most corn ethanol production because it exempted ethanol produced at plants in existence or under construction when the law was enacted, according to Margo Oge, director of EPA's Office of Transportation and Air Quality. This exempts, or "grandfathers,” about 15 billion gallons of ethanol production capacity from any emissions reduction requirements, she said. Ethanol produced from biomass should have little trouble complying with the emissions reduction requirements because EPA analysis shows large emissions reductions, Oge said.

The law requires that the renewable fuel content in the nation's fuel supply in 2022 include 15 billion gallons of corn ethanol, and 21 billion gallons of biomass, or "cellulosic” ethanol. Oge said none of the corn ethanol included under this requirement would be subject to emissions reduction requirements.

The biodiesel industry has a much bigger problem. It does not have a similar exemption to ethanol's, and soy-based biodiesel doesn't come close to meeting the emission targets. To use soy biodiesel, producers will have to use significant quantities of biodiesel made from waste grease or animal fats.

Joe Glauber, chief economist at USDA, said analysis of indirect emissions from ethanol production resulting from land-use changes is very tentative and uncertain, but the department is working with EPA to ensure that the final rule is based on sound assumptions. Oge reiterated remarks by EPA Administrator Lisa Jackson, who Tuesday said the indirect land-use change analysis will be subject to peer review.

Rep. Jerry Moran (R-Kan.) said he is planning to introduce legislation that would restrict EPA's ability to use analysis of indirect emissions that result overseas from the use of food grains for biofuels. His legislation would require EPA to focus on direct emissions, such as those emitted by production facilities.

Similar legislation (S 943) was introduced April 30 by Sen. John Thune (R-S.D.).

Subcommittee Chairman Timothy Holden (D-Pa.) said he and several other committee members are sending a letter to EPA to ask it to extend the 60-day comment period in the proposed RFS-2 rule to 180 days. Several subcommittee members said they would sign the letter.

Comments: The inability of lawmakers to know about the language in the 2007 energy bill not to their liking will very likely be amplified many times via the coming climate-change bill, which as Peterson's blast at EPA shows, faces a very rocky road in the House, and definitely in the Senate. To pass Congress, and notably the Senate, climate-change proponents will need Midwest lawmakers votes. That suggests some give in key climate-change provisions, but this would not likely mean reopening the 2007 energy bill provisions. Should Congress not have the votes to pass a climate-change bill, EPA has shown it will take the regulatory route, even though that will take years to unfold and will very likely include several lengthy court challenges.

As for Peterson's comments, if he thinks portions of the 2007 energy bill were very negative for corn, he should take another look at how it impacts the biodiesel industry.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


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