Industry criticizes bill to strip corn ethanol from RFS

By Erin Voegele | December 12, 2013

On Dec. 12, Sens. Dianne Feinstein, D-Calif., and Tom Coburn, R-Okla., introduced legislation that aims to eliminate the corn ethanol portion of the renewable fuel standard (RFS). The measure is titled the “Corn Ethanol Mandate Elimination Act of 2013.”

A copy of the bill provided by Feinstein’s office specifies that the measure would not impact the RFS requirements for advanced biofuel, cellulosic biofuel or biomass-based diesel.

A press release announcing the bill credits two factors with the need to eliminate the growth in corn ethanol consumption. It claims ethanol production artificially inflates food and feed prices, an allegation that has repeatedly been disputed in scientific studies. It also credits limitations associated with the E10 blend wall.

“I am pleased to join Senator Coburn and others on a bill to eliminate the federal corn ethanol mandate from the Renewable Fuel Standard, while maintaining provisions designed to grow the low-carbon biofuel industry,” Feinstein said. “Under the corn ethanol mandate in the RFS, roughly 44 percent of U.S. corn is diverted from food to fuel, pushing up the cost of food and animal feed and damaging the environment. Oil companies are also unable to blend more corn ethanol into gasoline without causing problems for automobiles, boats and other vehicles. I strongly support requiring a shift to low-carbon advanced biofuel, including biodiesel, cellulosic ethanol and other revolutionary fuels. But a corn ethanol mandate is simply bad policy.”

“The time to end the corn ethanol mandate has arrived. This misguided policy has cost taxpayers billions of dollars, increased fuel prices and made our food more expensive,” said Coburn. “Eliminating this mandate will let market forces, rather than political and parochial forces, determine how to diversify fuel supplies in an ever-changing marketplace. I’m grateful my colleagues on both sides on the aisle are prepared to take this long-overdue step to protect consumers and taxpayers from artificially high fuel and food prices.”

The ethanol industry has been quick to criticize the legislation. “This is monumentally stupid,” said Bob Dinneen, president and CEO of the Renewable Fuels Association. “This legislation ought to be entitled ‘The Oil Monopoly Protection Act of 2013.’ This bill would deprive Americans of cost-saving, renewable fuel choice. It would set this country back in its quest to gain energy independence and further damage the environment by increasing the need for fracking, tar sands, and off-shore drilling.”

Dinneen also pointed out that the timing of the bill is nonsensical, as U.S. farmers have just finished harvesting the single largest corn crop in history. “Corn surpluses are headed higher and corn prices headed lower,” he continued. “In some areas corn prices have already fallen below the cost of production, and below where corn prices were on the day President Bush signed the Energy Independence and Security Act in 2007 into law ($4.34/bushel). This legislation would take away demand for corn at a time when farmers need it most. It would increase farm program costs and destabilize this country’s agricultural industry.”

Tom Buis, CEO of Growth Energy, called the legislation shortsighted and said it would continue to keep the U.S. addicted to oil. “This legislation is based on false, misleading information. To blame ethanol for an increase in the price of food may make for good rhetoric, but it is completely devoid of any facts to back it up. Corn ethanol is not the cause of high prices; it is the price of oil. Even the World Bank outlined how crude oil prices are responsible for 50 percent of the increase in food prices since 2004. Countless studies have shown that record-high oil prices, Wall Street speculators and the high costs of manufacturing, packaging and transportation are the true culprits driving up food prices,” he said.

“Furthermore, the authors of this legislation fail to understand the actual process of how ethanol is produced. Only the starch is removed, while all of the valuable components – the fiber, oil and protein is returned to the food chain in the form of a high protein animal feed,” Buis continued.

The Advanced Ethanol Council has also weighed in. “If the United States is going to emerge as the global leader in the development of advanced fuels and technologies, the country needs to stop spending so much time looking backwards,” said AEC Executive Director Brooke Coleman. “More than 90 percent of the gallons required for future blending under the RFS are advanced biofuel gallons, yet Senators Feinstein and Coburn are proposing to open up the standard and the Clean Air Act (CAA) to try to kick corn ethanol in the shins. This makes no sense.”

Fuels America added, “This bill from Senators Feinstein, Coburn, and their co-sponsors is short-sighted and demonstrates a failure to understand how the renewable fuel industry works. First and second generation renewable fuel are linked and in weakening the corn ethanol industry, this bill will kill the promise of cellulosic fuels – the very sector the Senators claim to support.”

Cosponsors of the bill include Sens. Richard Burr, R-N.C.; Susan Collins, R-Maine; Bob Corker, R-Tenn.; Kay Hagan, D-N.C;  Jeff Flake, R-Ariz.;, Joe Manchin, D-W.Va.; Jim Risch, R-Idaho; and Patrick Toomey, R-Pa. A full copy of the bill is available here.