A free-market group is advising the Environmental Protection Agency on a way to change its renewable fuels program by backing away from corn ethanol and going after more advanced fuels.
The American Council for Capital Formation issued a report Thursday outlining the plan, which could offer a first glimpse into how the EPA’s renewable fuel standard, or RFS, could be phased out or reformed into something that is far less of a “farm support” system for corn.
Presumptive Republican presidential nominee Donald Trump discussed phasing out the ethanol requirements in a major energy policy speech he delivered in North Dakota last month, but offered few details on how a phaseout would work.
“Given the serious environmental and economic impacts of the RFS, highlighted in my research findings as well as many others, I continue to believe now is the time to create more modernized and efficient policy aimed at promoting advanced biofuels,” said University of Tennessee professor Daniel De La Torre Ugarte, the lead author of Thursday’s report.
He says the goal of reducing greenhouse gas emissions would be better served by fuels derived from sources other than food grains.
“With a policy objective that is focused on lowering [greenhouse gas] emissions, advanced biofuels can play an important role in meeting this objective,” Ugarte said. “Yet, it is clear that the focus of the RFS thus far — for more than a decade — has been on corn ethanol.”
That focus has kept other fuels from entering the marketplace, he said.
The report was issued in time for the EPA’s first public hearing Thursday on its recently released 2017 Renewable Fuel Standard proposal that sets the program’s goals for next year. The standard requires refiners to blend increasing amounts of biofuels into the nation’s gasoline and diesel supplies, with corn ethanol currently providing the bulk of the program’s requirements.
The 2017 proposal requires that 14.2 billion gallons of corn ethanol be blended into gasoline. But the ethanol industry is threatening to sue the agency if it doesn’t raise the target to 15 billion gallons, arguing that it is the goal that Congress intended.
Ugarte said corn ethanol demand would have never risen above 4.5 billion gallons if it weren’t for the EPA regulations. His report shows that if properly structured, the standard would have produced better, more advanced “celluosic” fuels, which would have increased in demand to 10.4 billion gallons by 2016. Instead, those fuels have been diminished to a small fraction of that, acording to the report.
“Corn ethanol demand would have been 4.56 billion gallons in 2016 (or 30 percent of projected production) under a scenario in which we did not have a federal RFS policy in place,” according to a summary of the report’s findings. “Cellulosic ethanol demand would have been 10.43 billion gallons in 2016 (or 70 percent of projected ethanol production) under a scenario in which resources and mandates that have otherwise been used to support corn ethanol development had been redirected instead to cellulosic ethanol.”
Matt Dempsey, a spokesman for ACCF, said the report hits at a big concern among lawmakers over what happens once the standard ends in 2022. “Lots of concerns from across the board on what happens then,” said Dempsey, who is testifying at the EPA public hearing in Kansas City, Mo.
The RFS program that was passed by Congress in 2007 set a target of 36 billion gallons of renewable fuels blended in the nation’s fuel supply by 2022. Corn ethanol is supposed to be capped at 15 billion gallons in 2016 under the law, with cellulosic biofuels filling most of the remaining target over the remaining six years.
Democrats and Republicans have discussed a plan in recent years that would eliminate the corn ethanol requirement from the standard and maintain only the advanced biofuel targets. Such a plan would allow the market to dictate demand for corn ethanol, while new alternative fuels are commercialized.
The ethanol industry firmly opposes such a plan because it says that without the corn ethanol target in place, the market for the other fuels is undercut and diminished, and the whole program falls apart.
Proponents of the standard said the report’s recommendations are an affront to the biofuels industry.
The pro-ethanol group Americans United for Change released a counter report Thursday, ahead of the EPA meeting, called “ACCF: Big Oil’s Useful Tool.”
The group says it “exposes the organization’s deep but rarely acknowledged financial ties to Big Oil as it has emerged as a leading third-party validator of oil-friendly policies and a leading critic of the RFS.”
It also says the oil industry has a long history of using “front groups to help protect its bottom line,” saying it employed a similar tactic in the 1990s to derail action on climate change.
The Renewable Fuels Association, the ethanol industry’s lead trade group, blasted the report, calling it “the same old recycled talking points from ACCF and its Big Oil buddies.”
It adds that corn ethanol is reducing greenhouse gas emissions by 32 percent. The emissions are blamed for causing the Earth’s climate to warm, resulting in more severe weather and flooding.
“The renewable fuel standard has been an unmitigated success, helping to drive down gasoline prices, decrease U.S. reliance on oil imports and increase domestic biofuel production, while providing the lowest cost, cleanest-burning, highest octane additive available to refiners,” the ethanol group said.
“But the truth hurts Big Oil, which continues to desperately try to cling to its incumbent market share and more than 100-year-old subsidies. They can’t hit back at the truth, so they resort to obfuscation in the hopes that people won’t notice.”
