Make-Ready: Decision Time at the Bioeconomy’s Gettysburg

August 02, 2017

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by Jim Lane (Biofuels Digest) ... Iowa Governor Kim Reynolds and Nebraska Governor Pete Ricketts are the headliners in a battle in and about Washington DC this week. You can call it what you want: it’s Gettysburg.

As Reynolds put it, “I urge the EPA to raise the advanced biofuel, biodiesel and cellulosic volumes. The RFS is a bold policy, and Iowans and the industry as a whole have always risen to the challenge.” Meanwhile, Ricketts pointed urgently to “the President’s statements of support for the corn ethanol industry and EPA Administrator Scott Pruitt’s commitment to implement the program in a way that honors Congressional intent.”

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... Oil Patch vs Farm Patch, over access to energy markets and the resulting good times for commodity prices, state revenues, and jobs. The outcome could be a downward spiral point for farm states that are seeing state tax revenues under severe pressure — just when taxpayers in these states had been hoping for some tax relief.

So, the stakes are high. The Administration is aiming for the power to reset Renewable Fuel Volumes without deference to Congressional targets — that’s the Trump “expand-o-grab”— and farm states, facing painful recessions, are ready for battle over the biggest available value-add they have, the energy markets.

Why the crisis atmosphere?

The Omaha World-Herald put it best:

“Nebraska’s economic output in the first quarter this year was 4 percent less than the same period a year ago. This was the worst first-quarter figure of any U.S. state…

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... (F)alling crop prices are driving down land values — which affects everything from farm credit to state tax revenues.

Why is land value important? With a value of $2.40 trillion in 2015, the value of farm real estate (land and structures) accounted for over four-fifths of the total value of U.S. farm sector total assets, according to USDA.

Why should everyone, everywhere watch this battle?

Agricultural production accounts “for around 51 percent of the U.S. land base”, says USDA. “Land use and land-use changes have important economic and environmental implications for commodity production and trade, open space, soil and water conservation, air quality and atmospheric greenhouse gas concentrations, and other areas of interest.”

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However, agricultural exports are in decline, and with the strong dollar, that’s not likely to change.

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The fix? They see it in US transportation fuel markets — where demand is up, renewables have a strong value proposition, and US farm sector energy production capacity is over 21 billion (ethanol-equivalent) gallons.

However, distribution is controlled by the petroleum industry — hence the market-forcing mechanism of the Renewable Fuel Standard as set by Congress in 2005 and revised in 2007. The EPA oversees the annual volumes and is holding hearings this week on a controversial reverse on renewable fuel volumes — and that’s why the battle for the future of the farm sector is in DC, why EPA is at the heart of it, and why GOP farm-sector governors are on the hustings to protect their economies and tax bases.

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Oil Patch vs Farm Patch — and both sides vying for the support of the Border States. The former with a Copperhead appeal to lower prices and less regulation, the latter with a Whig appeal to the broad national benefits of expanded domestic production through national investment.

Why does the bioeconomy base care so much? They fear a market lock-out without the RFS, and they fear the loss of financing without policy stability.

But there’s one thing the industry can work harder on, and that’s technology risk.

Policy can be technology-forcing, but nothing is market-forcing like technology, and the industry needs to get behind the technologies that are working, and get the technologies that aren’t working over the line. Policymakers, financiers, the public — everyone likes a winner. The era of “build, commission, and pray” has got to end. Gettysburg wasn’t won with rifles that wouldn’t shoot. READ MORE

Biofuel stakeholders speak out at hearing on 2018 RFS proposal (Ethanol Producer Magazine)

EPA Hears Calls for RVO Adjustments (Brownfield Ag News)

Govs. Ricketts, Reynolds testify at EPA hearing, urge greater federal support for advanced biofuels (Omaha World-Herald)

US likely to keep biofuels mandates stable due to farmers' voting clout: Mielke (Platts)

Cellulosic Ethanol Flaws: Biofuels Industry Critical of Latest RFS Proposal (DTN The Progressive Farmer)

Groups push for swift US biofuel rule change (Argus Media)

Refineries go to battle with oil majors over ethanol (Houston Chronicle)

An Ethanol Mandate Increase Would Be Bad News For Black America (Huffington Post)

RFS Roundup – August Special (Environmental and Energy Study Institute)

Ethanol is heading toward obsolescence. Iowa will need a new plan. (Des Moines Register)

‘Ethanol’s Here To Stay’: Homeland manager touts the fuel at Farm Bureau meeting (New Hampton Tribune)