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Ethanol Industry Details Policy Needs
Chris Clayton 2/08 7:53 AM
DES MOINES (DTN) -- Geoff Cooper, president and CEO of the Renewable Fuels Association, isn't holding out much hope for new legislation for biofuels in the new Congress.
"If the last few weeks are any indication, we're in for a rocky ride the next two years," Cooper said, pointing to the struggles the House of Representatives has had in getting organized. "It's hard for me to see any meaningful, big-ticket legislation that we would find helpful,"
Cooper spoke Tuesday at the Iowa Renewable Fuels Summit as industry leaders touted gains on the state and federal level over the past year while also lamenting that the Biden administration has yet to complete work on year-round E15.
The industry also sought to pivot discussions about carbon pipelines away from landowner division to an edge needed for the industry to remain competitive in a low-carbon economy.
Monte Shaw, CEO of the Iowa Renewable Fuels Association, pointed out EPA had a proposed rule for year-round E15 for nine Midwest states that was sent to the White House Office of Management and Budget (OMB) in December. The OMB then sent the proposal back to EPA.
"EPA is not the problem on this E-15 fix," Shaw said. "Someone at the White House put the brakes on."
Cooper later noted the American Petroleum Institute -- for years a policy opponent of biofuels -- approached RFA about working out a national E15 waiver rather than opening the door for nine Midwest states to have their own blend rules.
"The refiners do not want to do what the governors are pursuing and that's why the White House is dragging its feet on this," Cooper said.
The problem, however, is that the clock is again ticking to have a rule before the summer driving season. Once OMB finally greenlights a proposed rule on E15, it will require a comment period and likely further revisions before a final rule comes out. Last spring, President Joe Biden signed an emergency waiver for E15, citing high fuel prices. Cooper told DTN he thought an emergency waiver would be harder to justify a second year.
"This is going to continue to drag out," he said.
Cooper added, somewhat contradicting himself on legislation possibilities, "We are actively pushing EPA and the White House to make that fix before the summer months and there is also a legislative opportunity to solve this once and for all nationwide in Congress."
15 BILLION PLUS
Corn ethanol production in 2022 hit 15.4 billion gallons, which is still below the pre-pandemic high of 16.1 billion gallons. Gasoline demand remains soft, still down nearly 9 billion gallons from pre-pandemic levels as well.
Still, 2022 also marked the first year under the Renewable Fuels Standard that EPA mandated 15 billion gallons of blend volumes for refiners.
"EPA finally put the RFS back on track [and] required 15 billion gallons of conventional renewable fuel," Cooper said.
With help from the emergency waiver -- and incentives in states such as Iowa -- E-15 also hit record volumes in 2022 -- selling close to 100 million gallons per month.
EPA SET RULE
Friday also is the deadline for the comment period for EPA's proposed "set" rule, which will establish how EPA will set refinery blend requirements for 2023-2025. The proposed rule right now sets blend volumes for conventional ethanol at 15.25 billion gallons for 2024-25.
The rule for 2023 would also include 15.25 billion gallons after EPA agreed to restore 250 million gallons of blend volume obligations that had been illegally waived back in 2016.
While the ethanol industry is largely supportive of the new set rule, the biodiesel industry maintains EPA came in too low for blend levels of biodiesel.
The proposed rule would increase biomass-based diesel by 60 million gallons to 2.82 billion gallons in 2023, by 70 million gallons to 2.89 billion gallons in 2024, and by 60 million gallons to 2.95 gallons in 2025, according to the American Farm Bureau Federation.
Kurt Kovarik, vice president of federal affairs for Clean Fuels Alliance America -- formerly the National Biodiesel Board -- said the biodiesel industry has 3.1 billion gallons of production capacity and the RFS levels should reflect that production.
"Our goal to the Biden administration and EPA is that they need to course correct before they finalize that rule" Kovarik said.
CARBON CAPTURE PIPELINES
A bill in South Dakota's legislature advanced out of committee Monday that would block two multi-state carbon pipelines from using eminent domain to secure land.
Iowa lawmakers also have introduced similar bills. Shaw told Iowa RFA members the importance carbon capture and sequestration will be for ethanol plants in the state going forward.
"The largest domestic and export markets are demanding low-carbon ethanol," Shaw said. Capturing or sequestering carbon "is going to be life or death for ethanol plants in the next couple of years."
Shaw also said legislation blocking eminent domain power specifically singling out carbon pipelines should be viewed as a "direct attack on us [and for] the benefit of people who want to ban liquid fuels."
Reflecting the role of carbon pipelines going forward, Summit Carbon Solutions and Navigator Ventures LLC -- the two biggest pipeline project developers in the Midwest right now -- were both "Gold Sponsors" for the summit.
David Kruse, chairman of Commstock Investment, also owns a 900-acre farm in northwest Iowa and talked about negotiating with a pipeline company. He said he felt the pipeline operator agreed to about 80% of his demand. Talking about the benefits of pipelines going forward, he added, "The one thing I would counsel is they make themselves aware of the economic impact of what the CO2 pipelines has on the carbon source and subsequently on the value of ethanol."
Ernie Goss, an economics professor at Creighton University in Omaha, also suggested failing to establish carbon sequestration as a benefit for ethanol plants could translate into the loss of $1 a bushel for corn, "if we don't get sequestration." He added, "We've got to move in this direction in my judgement."
John Thompson, technology and markets director for the Clean Air Task Force, a group that promotes carbon capture, said the Biden administration would not be able to achieve U.S. emission goals if carbon capture technology is not adopted by industries.
"Without progress on carbon capture right here in this state, we're going to miss our targets," Thompson said. "These are fundamentally important for meeting our climate goals."
TAX INCENTIVES IN IRA
The Inflation Reduction Act, which passed Congress late last summer, has multiple incentives to support biofuels including the Clean Fuel Producer Tax Credit up to $1 a gallon, a tax credit for Sustainable Aviation Fuels up to $1.75 a gallon, and $500 million to help build out biofuels infrastructure.
"There is some great stuff in that package for biofuels, it is a game-changing piece of legislation for our industry," Cooper said.
Cooper added, "We remind everybody that this administration has been quietly supportive of ethanol and renewable fuels."
Still, Cooper and others lamented the Biden administration's support for electric vehicles as President Biden seeks to lower U.S. greenhouse emissions 50% by 2030 from 2005 levels. As part of that, Biden also wants to see 50% of all new passenger cars and light trucks sold in 2030 to be "zero-emission" vehicles.
"We have a strong disagreement with that," Cooper said, adding the administration is only looking at tailpipe emissions and not electric power generation from coal used to charge vehicles. "It's not right you are putting all of your eggs in the electric vehicles," Cooper said.
Electric vehicles hit a high last year of 8% of all vehicles sold in the country. But Cooper noted, even if one-third of vehicles sold by 2030 were EVs, that would still only account for 7% to 8% of all vehicles on the road.
Right now, ethanol's carbon footprint is as much as 50% smaller than gasoline. The industry can continue to move to 70%, 80% lower emissions, but it will take technology -- and carbon capture.
"Carbon capture and sequestration is going to be vital for us to achieve these carbon scores," Cooper said.
Also see, "Biofuels, Carbon Capture and Storage,"
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
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