On December 12, 2013, Senators Dianne Feinstein (D-CA) and Tom Coburn (R-OK) introduced the Corn Ethanol Mandate Elimination Act of 2013, which would eliminate the corn ethanol gallon requirements under the federal RFS, while leaving in place those under the law for cellulosic and advanced biofuels and biodiesel. The sponsors have argued that the RFS corn ethanol mandate, which increases to 15 billion gallons per year by 2022, should be removed to combat the recent increase in corn prices. The bill currently has eight bi-partisan co-sponsors, including Senators Richard Burr (R-NC), Susan Collins (R-ME), Bob Corker (R-TN), Kay Hagan (D-NC), Jeff Flake (R-AZ), Joe Manchin (D-WV), Jim Risch (R-ID), and Patrick Toomey (R-PA).
The corn ethanol industry has argued that the RFS has had negligible impact on corn supply and prices, and that recent increases in the price of corn are attributed to the corresponding increase in the cost of energy used to make and transport the commodity.
On October 30, 2013, Representatives Bob Goodlatte (R-VA), Jim Costa (D-CA), Peter Welch (R-VT), and Steve Womack (R-AR) sent a letter signed by 169 Members of Congress to U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy urging EPA to use its authority to reduce the 2014 statutory renewable volume obligations (RVO) for all types of biofuels, including conventional corn starch ethanol under the federal Renewable Fuel Standard (RFS). A copy of the letter is available online.
The arguments made in the letter echo those put forth by the oil and gas industry and assert that the 2014 RVO reductions are needed to protect against corn price volatility and the E10 ethanol blend wall.
The letter comes at a crucial time in RFS advocacy. The oil and gas industry is leading the effort to repeal or weaken the RFS through regulatory, legal, and legislative channels, while the biofuels industry is fighting to maintain the policy, arguing that it is the fundamental driver of investment in the industry and that it provides EPA sufficient regulatory flexibility to make all necessary adjustments in its implementation. Further, the biofuels industry notes that no reductions in the conventional RVOs are needed as the RFS has minimal impact on corn prices and there are sufficient mechanisms for 2014 compliance. In addition, many in the biofuels industry argue that the concerns about the E10 blend wall are misplaced, as it exists because the oil and gas industry has refused to make or encourage the necessary investments to enable additional ethanol to be blended into the fuel supply.
A copy of Growth Energy's press release and the Renewable Fuels Association's (RFA) statement on the letter are available online and online.
As stakeholders eagerly await the impending official release of the U.S. Environmental Protection Agency's (EPA) proposed 2014 Renewable Fuel Standard (RFS) rule, strong advocacy from all sides continues on the issue in Washington. The Office of Management and Budget (OMB) has been reviewing the proposed rule since August 30, 2013. Recently, a draft of it was leaked (the leaked draft proposal). In the leaked draft proposal, for the first time, EPA would lower the RFS target volumes not only for cellulosic biofuels, but for conventional ethanol and advanced biofuels as well.
On October 23, 2014, biofuels advocates, including representatives from the Biotechnology Industry Organization (BIO), Advanced Ethanol Council (AEC), DuPont, Novozymes, and Abengoa, met with officials from OMB and the White House. Reportedly, they urged the Administration to reconsider the leaked draft proposal. They argued that the oil and gas industry's concerns about the blendwall -- the point at which no additional E10 may be blended into the fuel supply -- are unfounded and result not from the inability to blend greater amounts of ethanol into the fuel supply, but instead from the industry's refusal to do so. On October 29, 2013, BIO and AEC sent a letter signed by over 30 biofuels companies to President Obama again urging the Administration to reconsider the leaked draft proposal and stressing the importance of consistent RFS implementation to promoting investment in biofuels, including next generation biofuels.
This week, AAA and Sportsmen have come out in support of the oil and gas industry's position that EPA should lower the RFS volume requirements for ethanol to no more than 9.7 percent of the U.S. fuel supply. AAA echoes the industry's argument that such reduction is needed due to the E10 blend wall and concern that E15 could damage car engines. The Congressional Sportsmen's Foundation held a briefing this week during which it suggested that the ethanol volume requirements under the RFS have caused hunting and fishing areas to be converted to cropland, and have degraded water quality in the Mississippi River watershed, among other changes.
Renewable fuel and chemical company Aemetis, Inc. announced this week that EPA has approved its Renewable Fuel Standard (RFS) pathway to produce ethanol using grain sorghum and biogas with the Company's existing Combined Heat & Power system to generate D5 Advanced Biofuels Renewable Identification Numbers (RIN). This announcement means that additional fuel will qualify to fulfill the annual renewable volumetric targets under the federal RFS statute. It comes as EPA is preparing its proposed RFS volumes for 2014, which the Agency indicated it would likely reduce from those set in the statute to adjust for supply and the impending ethanol blendwall.
Aemetis' press release on the announcement is available online.
On August 15, 2013, USDA announced funding under its Renewable Energy for America Program (REAP) for 631 energy efficiency and renewable energy projects throughout the country. About $400,000 will go to 13 projects designed to install blender pumps in gas stations, which will allow for the greater distribution of higher blends of ethanol, including E85 fuel. The ethanol industry has been calling for greater federal help on blender pumps to allow for greater distribution of E85, which can help alleviate the impending "blend wall."
The American Petroleum Institute (API) this week launched its second ad in selected markets against the federal RFS. The ad is being aired in California, Colorado, Illinois, Kentucky, Michigan, Ohio, and Washington, D.C. It comes just after EPA issued its final 2013 RFS rule (more information is available online), and as the House Energy & Commerce Committee leadership is working on potential modifications to the RFS (more information is available online). The ad continues the message of the refining industry that the RFS mandates "unworkable" volumes of renewable fuel in the U.S. fuel supply. The renewable fuel industry continues to argue that the RFS law contains sufficient flexibility to account for changes in the market. The industry points to the final 2013 RFS rule to illustrate this, as EPA significantly lowered the cellulosic volumes to adjust for market realities.
Also this week, API and the American Fuel and Petrochemical Manufacturers (AFPM) jointly petitioned EPA to lower its 2014 total ethanol requirements to 9.7 percent of total gasoline supply in the country. This request follows language in EPA's final 2013 RFS rule suggesting that the Agency is considering lowering renewable fuels obligations to help account for the impending blend wall in its upcoming 2014 rule. API and AFPM argue that lowering the 2014 renewable volume obligations would reduce the cost burden of the RFS to the refining industry.
Beta Renewables, a joint venture between chemical company Gruppo Mossi & Ghisolfi and investment company TPG, announced that it had begun commercial production at its cellulosic ethanol plant in Crescentino, Italy, at a price competitive with corn ethanol and gasoline. Novozymes, the leading producer of enzymes used for biofuels production, has invested in Beta Renewables. Beta Renewables expects to export the technology to develop about 20 new plants by 2017.