Biofuels: Next big fight is keeping RFS II, E15 has a way to go to reach marketplace

Written by Jonathan Eisenthal

Though the ethanol tax credit remained in place, ethanol opponents counted the House of Representatives’ vote to end VEETC as a win and, with VEETC scheduled to end at the end of this year, those same ethanol opponents are setting their sights on a challenge to the Renewable Fuels Standard II and the minimum required use of biofuels that it sets.

That was Brian Jennings’ take on the current environment for biofules policy in Washington. Jennings, executive vice president of American Coalition for Ethanol, was joined in a panel discussion on biofuels by John Fuher, director of government affairs for Growth Energy; and Geoff Cooper, vice president for research for Renewable Fuels Association.

The three panelists spoke for an hour at the Minnesota Aggricultural Leadership Conference, a two-day gathering in Brainerd, Minnesota, organized by Minnesota Corn Growers Association.

“Our industry has to draw line in sand,” said Jennings. “Our industry has to be ready for this fight on RFS II. Cellulose targets have not been met. Congress and EPA continue to reduce targets for cellulose. There are already legislative attempts to open RFS. Another option–states can ask for waivers if there isn’t enough feedstock. Gov. Perry of Texas has applied for a waiver. We need to be ready for that fight. The good news is that that’s a fact finding mission. EPA looks at facts regarding what’s going on.”

Geoff Cooper added, “The bar was set very high. Any waiver request has to show conclusively high economic harm across the whole economy, not just two cents a pound on bacon.”

The panelists agreed that the super committee that has been charged with reducing the deficit will likely have an impact on renewable fuels policy going forward, but considering the timing–that their proposal is due Nov. 23–they find it highly unlikely that they will attempt to prematurely end VEETC with only a month to go before it runs out. In the process of looking for trillions in cuts, four weeks worth of tax credits on ethanol would offer scant savings.

Fuher said that Growth Energy would focus its lobbying efforts on getting funding and policy support for flexible fuel infrastructure–namely blender pumps that can offer the consumer a range of ethanol blends from E10 up to E30 and E50 all the way through E85. Jennings mentioned that the Thune-Klobuchar effort, though it did not make it into the debt limit raise and spending package passed by Congress, could possibly make it through Congress during the next session. This plan would create a three-year program offering cost sharing to fueling station owners who install blender pumps.

RFA feels E15 is the best bet for the nearest term means to successfully increase ethanol’s share of the transportation energy market.

Cooper sketched the stage that the E15 approval process has reached: “We have lots of technical work to do yet. Job one will be finishing the fuel registration process. We have health effects testing, and the literature review on all existing research on emission of E15 have been done. RFA led the effort to get tests done in conjunction with Growth Energy. We submitted our results (to EPA) in February. We expect to hear the results on E15 in next few months. One of the final legal hurdles we need to jump–state regulatory efforts will be needed, state by state. Some states have quirky regulations that don’t allow anything higher than E10.”

Cooper counseled patience and restraint when it comes to problems in RFSII. With opponents lining up to try to scuttle the biofuels requirements altogether, Cooper said it’s wisest to leave the existing law alone.

“Ethanol cannot qualify as advanced biofuel under RFS II and we don’t think that’s fair,” said Cooper. “However, I think if we ask Congress to go into EISA we are asking for trouble. Reopening RFS to deal with one definition would be risking too much for a relatively small gain.”

Cooper said RFA leaders envision E15 under growing a gradual process of market penetration, beginning in the Midwest, where most ethanol is produced. He noted that the states within PADD2–the federal government’s Petroleum Administration Defense District covering the Midwest–drivers consume 40 billion gallons of gasoline. If just a fifth of those gallons went from E10 to E15, that would represent a sales volume increase of 500 million gallons.

 

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