Some Ethanol Lobbyists Looking to Minibus Measure to Alter Advanced Biofuel Definition

November 2, 2011 02:07 AM
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A change could mean corn-based ethanol could qualify as advanced biofuel

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

Livestock, poultry and dairy interests for a while have lobbied against several features of the corn-based ethanol program – both the 45-cent per gallon ethanol incentive payment, the 54-cent per gallon import tariff, both of which are slated expire at the end of 2011, and even the ethanol mandate. Some ethanol lobbyists are resigned about not getting the tax incentive and import tariff extended. But they are aggressively fighting any change in the corn-based ethanol mandate, and are also pushing just as hard for a congressional change in how advanced biofuels are defined.

And corn energy lobbyists aren't stopping there. They are pushing for several programs/extensions in the coming new farm bill. The 2008 Farm Bill included several energy-related programs, primarily loan guarantees, for processing plants, and subsidies that have been used by USDA Secretary Tom Vilsack to help upgrade service station pumps and to encourage farms to grow grasses and other feedstocks that can be used instead of grain to make fuel. These programs expire next year unless Congress approves an extension.

Also, supporters of the gasoline pump subsidy want the program's language altered to install pumps that can be funded in urban as well as rural areas.

USDA Secretary Tom Vilsack recently made a push for some of the programs: the Biomass Crop Assistance Program, which subsidizes the production of next-generation feedstocks such as switchgrass, and the Rural Energy for America Program that Vilsack has been tapping to subsidize new service station pumps.

But it is the advanced biofuel definition change that is being pushed the most in quiet sessions on Capitol Hill. The push is to put legislative language into the first minibus for Fiscal Year 2012, which includes Agriculture/FDA spending, that would allow corn ethanol to qualify for congressionally mandated production of “advanced” biofuels, something current law specifically denies.

Energy programs and the 2008 Farm Bill, background information. The 2008 Farm Bill built on the 2002 Farm Bill as well as the previous renewable energy legislation, but refocused biofuels policy initiatives in favor of non-corn feedstocks, especially cellulosic-based feedstocks, in response to growing concerns about the emerging spillover effects of increasing corn use for ethanol production. Like the 2002 Farm Bill, the 2008 legislation contained a distinct energy title (Title IX) that significantly expanded the number and types of programs available to support renewable energy production and use. In addition, new renewable-energy provisions were included in the rural development (Title VI), research (Title VII), livestock (Title XI), and tax (Title XV) titles of the 2008 Farm Bill. The 2008 Farm Bill authorized $1.1 billion in mandatory funding for energy programs for FY 2008 through FY 2012, compared with $800 million in the 2002 farm bill (FY 2002-FY 2007).

Mandatory authorization in the 2008 Farm Bill includes $320 million to the Biorefinery Assistance Program, $300 million to the Bioenergy Program for Advanced Biofuels, and $255 million to the Rural Energy for America Program (REAP). The Biomass Crop Assistance Program (BCAP) is authorized to receive such sums as necessary (i.e., funding is open-ended and depends on program participation). Discretionary funding in the 2008 Farm Bill totaled $1.7 billion (including $600 million for the Biorefinery Assistance Program), compared to $245 million in the 2002 Farm Bill. However, all discretionary program funding is subject to the annual appropriations process, which may or may not appropriate funds due to budget constraints. Actual discretionary appropriations to Title IX energy programs have been substantially below authorized levels through FY2011.

The Renewable Fuels Standard (RFS) requires 36 billion gallons of renewable fuels in 2022. Of this mandate, an increasing share must be met with “advanced biofuels” — biofuels produced from feedstocks other than corn starch, but including fuels produced from cellulosic materials including grasses, trees, and agricultural and municipal wastes. As has been the case in previous years, in 2011 the vast majority of the mandate will be met with US corn ethanol. In future years, corn ethanol’s share of the RFS is effectively capped at 15 billion gallons per year. The 2007 Energy Independence and Security Act (EISA) amendments to the RFS specifically mandate the use of cellulosic biofuel (16 billion gallons by 2022) and biomass-based diesel fuel (1.0 billion gallons annually by 2012). However, advanced biofuels, especially cellulosic fuels, have been slow to develop and fuel production has lagged the EISA’s mandate schedule, forcing the Environmental Protection Agency (EPA) to issue some modifications.

The US did not have sufficient cellulosic biofuel production capacity to meet the 2010 and 2011 RFS mandate instituted by Congress in EISA, and this will be the case for the 2012 mandate. The EPA is required to lower the cellulosic biofuel standard if the projected volume of cellulosic biofuel production is less than the applicable volume specified in the statute. The cellulosic biofuel allotment in the mandate, as established by EISA, was 100 million gallons due in 2010, 250 million gallons in 2011, and 500 million gallons in 2012, increasing to 16 billion gallons by 2022. EPA lowered the RFS cellulosic biofuel mandate to 6.5 million gallons in 2010 and 6.6 million gallons in 2011. For the 2012 cellulosic biofuels mandate, EPA proposed a range of volumes from 3.55 to 15.7 million ethanol equivalent gallons from which to consider a value. Roadblocks include unknown levels of feedstock supply, expensive conversion technology that has not yet been applied commercially, and insufficient financial support from private investors and the federal government.

The Renewable Fuels Association in the past has backed a cut in the 2012 cellulosic ethanol mandate but pushed raising the corn ethanol mandate to make up the difference. In comments to EPA, Growth Energy, another ethanol trade group, has previously stated the 2007 EISA law is a “corn discrimination” act that unfairly bars corn ethanol from ever qualifying as an advanced biofuel despite more efficient technologies that have reduced environmental impacts.

Advanced biofuel lobbyists, and US livestock and poultry industry groups, are well aware of the push-pull on these issues. The Advanced Biofuels Association (ABFA) noted the industry needs time to attract investors and develop commercially competitive technology for large-scale production. Michael McAdams, ABFA president, previously told Congressional Quarterly, “There are elements of the corn ethanol industry that would like to fill the whole 36 billion gallon mandate and completely eliminate any future of an advanced biofuels industry.” But he quickly noted there is no movement in Congress for making such a “fundamental shift in the current policy.”

Comments: House Democrats and the Obama administration warned Republicans against attaching controversial policy riders to FY 2012 spending bills. House Democrats sent a letter Tuesday to Speaker John Boehner (R-Ohio) asking Republicans to “live up to their pledge to not use must-pass legislation to advance a partisan agenda” by barring controversial policy provisions from FY 2012 spending bills. “While not all policy riders are objectionable,” they wrote, “many of those included this year are not only controversial but blatantly partisan.” The group, which included Minority Whip Steny Hoyer (D-Md.) and 182 others, warned about riders that would block implementing the 2010 health care overhaul, roll back clean air and water protections and limit access to abortions. House Republican appropriators attached several riders on those and other issues to their versions of spending bills, but their fate is unclear in conference negotiations with the Democratic Senate.

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






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