World Events Underscore the Need to Expand Renewable Fuel Production

March 10, 2022

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(Solutions from the Land) ... The news of increased fuel costs comes as the Biden administration is considering a relaxation of federal requirements calling on blenders to mix specific amounts of ethanol or biodiesel when producing the nation’s petroleum-based fuel supply.

To even consider backing away from the statutory obligation to provide our nation’s drivers with the cleaner, less-expensive renewable transportation fuels that ethanol and biodiesel producers can provide runs contrary to common sense, much less the national interest.

While E10 is the ethanol blend fuel long sold widely in the United States, there has been a longstanding push for universal, year-round sales of E15. Those efforts to extend the availability of the 15-percent ethanol blend in gasoline, which faces restrictions in some areas of the nation during summer months, took a hit in January when the Supreme Court reversed a move by the EPA under the Trump administration to expand sales of E15 nationwide year-round.

Legislation is now pending in Congress that would address the Supreme Court’s issues and extend a “volatility waiver” that would make ethanol blends above 10 percent available across the country throughout the year. Supporters of the measure say higher blends of ethanol burn cleaner, providing a way for more Americans to be part of the climate solution.

The authors of the measure don’t restrict their focus on just E15, wisely embracing higher blends, like E30, a premium fuel known for its high octane. DOE research shows E30 significantly reduces carbon deposits within a vehicle, creating a cleaner and more efficient engine.

Research by Steffen Mueller, principal economist at the University of Illinois at Chicago’s Energy Resources Center, shows that the greenhouse gas cuts that could be achieved by using higher-octane midlevel blends with ethanol are at least equal to those that EPA thinks are available from electrification. EPA – and the White House – are ignoring a very cost-effective way of achieving its desired improvements to the detriment of environmental quality, consumers, farmers, and the automotive industry.

White House advisors also would do well to look at the cost-savings U.S. drivers could enjoy with the sale of higher ethanol-blended motor fuels. Early this week, high-octane, premium gasoline sold at a gas station in Watertown, S.D., for $4.50 per gallon. A gallon of high-octane E30 was available at that same station for $3.07 per gallon. That’s a savings of $14.30 for a 10-gallon purchase.

The multidimensional crises the world is now experiencing in real time require bold action and bold leadership.

SfL calls on Congress to take at least one step by adopting the Next Generation Fuels Act now. This bipartisan measure would leverage greater fuel octane to reduce carbon emissions from transportation, improve air quality by reducing the use of harmful aromatics and increase demand for biofuels. SfL also calls on President Biden to direct EPA to immediately remove barriers and enable expanded production of midlevel blends, including E30 automotive fuels. The conflict in Ukraine only further demonstrates the need for a new way forward. This is an urgent national priority. READ MORE

America’s Ethanol Obsession Helps Putin -- Ending America’s foolish subsidies for ethanol could aid Ukraine. (The Atlantic)

Cutting biofuels can help avoid global food shock from Ukraine war -- The US and Europe can compensate for the loss of Ukraine’s grain exports by scrapping biofuel mandates, helping to avoid a food price shock (New Scientist)

Ag Policy Blog: Arguments Go Off the Rails When Tying Ethanol Policies to Russian Invasion of Ukraine (DTN Progressive Farmer)

Opinion: Skyrocketing oil prices are a painful reminder of the need for energy diversification -- While we are reminded anew of our fragile energy security, meanwhile, the nation is finally clamoring for low-carbon fuels. (Des Moines Register; includes VIDEO)

Clean Fuels Urges President to Support RFS and Rely on Biomass-Based Diesel to Replace Russian Oil (Clean Fuels Alliance America)

Our Response to The Atlantic: The Truth about Ethanol, Energy Security and World Grain Supplies (Renewable Fuels Association)

Lawmakers, Biofuel Groups Turn Up Heat for E15 (Southeast Ag Net; includes AUDIO)

Excerpt from DTN Progressive Farmer: Yet, in the magazine, "The Atlantic" on Monday, staff writer David Frum, a political commentator and former speechwriter for President George W. Bush, wrote "The U.S. Subsidy That Empowers Putin." In Frum's essay he makes the case that "the ethanol program" has helped leverage Russian President Vladimir Putin's hand because if Putin can takeover Ukraine, then "the enlarged Russian empire would provide almost one-third of the world's wheat exports."

Frum stated, "Russia has become so dominant in wheat markets in great part because America has retreated from them. U.S. wheat production was about one-third lower in 2018 than at its peak in the early 1980s. Wheat has yielded to corn. Almost 70% of all U.S. grain production is now corn, up from 47% in the late 1960s. And of that immense crop of corn, almost half is formulated into ethanol to drive cars and trucks."

In the U.S., wheat acreage peaked in the early 1980s. In the 1990s, planted wheat acreage averaged about 70 million acres a year. Wheat acreage has since fallen to an average of about 45 million acres a year. Yields over that stretch have increased about 10 bushels an acre.

Corn acreage since the early 1990s is up about 14 million acres on average. Yield for corn has gone up roughly 54 bushels an acre or about 30% as well.

While wheat acreage may have lost ground to corn, the biggest gain in acreage since the early-1990s has been soybeans, which has added more than 20 million planted acres. Soybean yields have grown about 12 bushels an acre over that time.

Looking at lost wheat acres over time, USDA cites "international competition in global wheat markets" and better profitable returns for growing other crops. Changes in farm programs in the 1990s also gave farmers more flexibility about which crop to grow. On top of that, corn and soybeans have biotech varieties that have helped increase production and better manage crop pests. Wheat, because it is primarily a human food, has not had any genetically-engineered seeds approved for farmers to grow.

And then there is climate change. Soybeans and corn are now grown more in the Dakotas, Minnesota and other northern states up into Canada. Both genetic improvements and longer growing seasons have played roles in the northern migration of those crops taking acreage from wheat.

These are a few reasons why it's oversimplistic and inaccurate to declare U.S. wheat has lost all of its acreage because of corn ethanol.

Focusing on the energy debate, U.S. ethanol production has the capabilities to offset the loss of Russian oil imports. That was a repeated theme last week at Commodity Classic. The capacity of the country's 208 operating ethanol plants is large enough to add at least another 1.5 billion gallons of liquid fuel into the supply stream. Allowing year-round E15 and converting one-third of all fuel pumps to E15 would fill that gap.

Frum wrote any benefits of ethanol over gasoline "are nullified by ethanol's terrible toll on world food output."

He dismisses, discounts or doesn't consider the 22.2 million tons of distillers dried grains, of which about half are also exported, that come as a byproduct from ethanol production.

Frum concludes that "If food-importing nations in Asia and the Middle East could be assured that more American wheat, barley, and sunflower oil would be headed their way in 2023, and more corn would be available for animal feed rather than burned up as automobile fuel, wiser U.S. farm policy could even help consolidate global support for Ukraine."

Yet, Frum negates to mention that the U.S. also is the world's largest corn exporter, expected to ship out 2.5 billion bushels for animal feed and other uses in the 2021-22 crop.

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Having mentioned sunflower oil, Frum overlooks 2.09 billion bushels of soybeans -- 47.5% of the crop -- that will be exported as well as an additional 1.625 billion pounds of soybean oil.

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Frum didn't have the capacity in his article to highlight other energy subsidies, but he champions that "North American oil and natural gas can carry the world through the transition to an energy future based on wind, sun and the atom." While advocating for increased reliance again on fossil fuels, Frum's piece gives a distorted, oversimplified picture of U.S. ethanol policy .... READ MORE

Excerpt from Renewable Fuels Association: Wheat’s decline in the United States began decades before commercial-scale ethanol production even began. The amount of U.S. cropland planted to wheat peaked in 1981 at 88 million acres, ironically, in response to President Reagan’s lifting of a U.S. grain embargo against Russia (the embargo, incidentally, had been put in place by President Carter following the Soviet Union’s invasion of Afghanistan). Ethanol was barely an idea at that time.

After hitting the high-water mark in the early 1980s, wheat markets stagnated over the next two decades. Global surpluses overwhelmed demand as farmers became more productive; mid-1990s U.S. farm policy encouraged farmers to diversify their mix of crops; global trade agreements leveled the playing field for the world’s wheat producers; and technological innovation in other crops far outpaced improvements in wheat. At the same time, farmers in post-soviet Russia and Eastern Europe were finding that they had a comparative advantage in wheat production. They had ideal climatic conditions, could produce it cheaper than the U.S. farmer, and were far closer to import-reliant wheat markets like Egypt, Turkey and China.

By 2001, wheat acres planted in the United States had fallen to just 59 million acres—33 percent below the peak from just two decades earlier. This had nothing to do with ethanol. Indeed, the fledgling ethanol industry in 2001 was less than 1/10th of its current size and used just 5 percent of the U.S. corn supply.

To suggest that the emergence of the ethanol industry is somehow responsible for reduced U.S. wheat production since the 1980s isn’t just wrong—it’s irresponsible. If anything, ethanol’s growth in the 2000s was embraced by farmers—who had watched global economic forces erode prices and demand for U.S. wheat—because it gave them hope that they could profitability raise other crops on land previously dedicated to wheat. In any case, the U.S. remains as the world’s third-leading producer and exporter of wheat. Due to increased yield per acre, the average annual U.S. wheat crop has been larger over the past 10 years than it was during the decade of the 1970s, even though acreage has fallen by nearly one-quarter since then.

It was Frum’s former boss, President George W. Bush, who correctly recognized the massive potential of ethanol to reduce our nation’s dependence on foreign oil, while simultaneously cleaning the air and supporting farm income. While Frum chides Presidents Carter and Obama for their support of biofuels, it was President Bush who personally championed the creation of the Renewable Fuel Standard (RFS) in 2005 and successfully worked with Congress to expand the RFS as part of the 2007 Energy Independence and Security Act. Partly as a result of that landmark policy, ethanol displaces the need for 550 million barrels of imported crude oil every year, keeping billions of dollars in the U.S. economy.

Frum claims that ethanol and the RFS are no longer necessary because the United States “has become the world’s largest producer of both oil and natural gas.” But what has that gotten us? One need not look any further than today’s record-high gas prices and $100 oil to understand that increased U.S. oil production has done little to insulate American families from the volatility and geopolitical vagaries of world petroleum markets. How much higher would gas prices be without the roughly 15 billion gallons of ethanol blended annually? One estimate, from a former Yale University economist and advisor to two presidents, suggests Americans would be paying an extra 22 cents per gallon—or about $250 per household per year—if the RFS was eliminated, as called for by Frum. What’s more, there is no “ethanol subsidy,” as claimed by Frum—the tax credit available to oil companies that blended ethanol expired in 2011. Meanwhile, the oil industry continues to enjoy subsidies and tax write-offs, some of which have been in the U.S. code for more than a century.

Further, if global support for Ukraine is truly unconsolidated, as Frum implies, it’s not because of U.S. agricultural policy or America’s ethanol industry. It’s because those countries who have been slow to condemn Russia’s actions are dependent on Putin’s oil and gas and they fear the consequences of aligning with his enemies. Indeed, oil—not wheat (as Frum suggests)—is the real “Russian weapon of intimidation.”

That’s why domestically produced renewable fuels are so important. The United States was able to swiftly ban Russian crude oil imports partly because our nation’s leaders know America’s farmers and renewable fuel producers are at the ready to step into the breach and increase the production and use of low-carbon, lower-cost ethanol.

If unrest in Ukraine has taught us anything about the highest and best use of our agricultural and energy resources, it’s that we should double down on—not walk away from—policies that support expanded use of domestically produced low-carbon fuels. READ MORE