Battle Brewing over Ethanol Program Post 2022

by Jonathan H. Harsch (Agri-Pulse) Ethanol already supplies over 10 percent of the U.S. gasoline market and the fuel’s share is growing. Yet Congressman Bill Flores, who wants to see ethanol capped at 9.7 percent of the market, is holding back on reintroducing a measure that would do just that, “in an effort to seek a more holistic solution.”

Currently, Flores is calling for a “market-based energy policy” designed to “expand access to oil and gas exploration in the U.S. rather than trying to force non-economic sources of energy and technologies into the marketplace.”

To address what he considers outdated RFS mandates, Flores signed up 118 co-sponsors, including 11 Democrats, for his bipartisan Food and Fuel Consumer Protection Act (H.R. 5180) last year. He’s ready to do the same this year if necessary. He can expect oil industry support for either limiting or eliminating the RFS.

API’s Executive VP and Chief Strategy Officer Marty Durbin told the Renewable Fuels Association’s National Ethanol Conference last week that API will continue to fight for placing a hard cap on ethanol use.

Executive branch support is also possible but as of yet, unknown. The White House’s current America First Energy Plan specifically promises to “take advantage of the estimated $50 trillion in untapped shale, oil, and natural gas reserves” and commits to “reviving America’s coal industry.”

Flores hopes those pushing the “unrealistic extremes” of either eliminating the RFS or locking in ever higher volumes will instead accept his conclusion “that a negotiated outcome is much better than one which relies on a bunch of bureaucrats beginning in 2022.” He says his goal is “to negotiate a solution where I have certainty not only for 2018 but for 2022 and beyond, and right now that does not exist.” He sees especially good reasons for ethanol interests to come to the table with an open mind because “beyond 2022, there is not a certain space for corn-based ethanol.”

Rather than continue federal mandates or incentives that support “what we know about today,” Flores explains that the key is to “invest in basic research to try to find the solutions for tomorrow.” He says the solutions could be new technologies to improve ethanol and fossil fuels or “entirely new fuels.” More broadly, Flores adds that “when I look at long-term energy solutions, to me nuclear is the way to go, but that doesn’t solve the transportation fuel supply issues.”

The staffer sees added uncertainty because the White House position is in doubt. He notes that Trump has stated his support for the RFS and ethanol and yet has picked outspoken RFS critics Scott Pruitt and Rick Perry to head the EPA and the Department of Energy, respectively.

But Irwin (University of Illinois agricultural economist Scott Irwin) tells Agri-Pulse that “I believe E10 is safe . . . because the whole system is now set up for a 10 percent blend.” He says new technologies or shifts on “climate change politics” could trigger major changes. But he expects a continuing demand for ethanol as both the U.S. and export markets rely on it as a cheap source of the higher octane needed to fuel higher compression engines. With this demand building, he sees ethanol use continuing to grow even if Congress decides to revise its RFS volume mandates. READ MORE and MORE (Politico's Morning Energy) and MORE (Columbus Telegram) and MORE (Hutchinson News) and MORE (Gardner Edge) and MORE (Effingham Daily News)

Excerpt from Politico's Morning Energy: POET, the world's largest producer of ethanol, isn't feeling much heat to get behind a Congressional effort to overhaul the Renewable Fuel Standard. Rob Walther, the company's chief lobbyist, told ME that "the specter of 2022 " — when EPA gets license to set biofuel volumes — as something that could harm biofuels is just a specter. “It's not a real threat." Rep. John Shimkus (R-Ill.), who has been one of the leaders of the efforts in Congress, told POLITICO last month he thinks ethanol should be part of the efforts for fear of EPA's unpredictability after the congressional mandates end. But Walther thinks Pruitt won't upset key farm state constituencies by messing with the Obama administration's conventional biofuel requirements, which would mean the maximum 15 billion gallons for five years. So by 2022, "The market will have internalized 15 billion gallons," he said. READ MORE and MORE (Environmental Working Group's AgMag)