Higher ethanol blends key to driving farm economy

FROM THE JULY ISSUE: RFA caps corn ethanol at 15 billion gallons per year and we have reached and exceeded that level. Future growth must meet true demand, and that demand is blocked by unnecessary, arbitrary and baseless regulations.
By Doug Sombke | June 15, 2017

On a beautiful Southern California day in late March, the National Farmers Union gathered for its 115th Anniversary Convention in San Diego and reaffirmed its support for not just ethanol, but a new era of ethanol use critical to rural America and the farm economy. This position was captured in a special order of business, or what some might call a resolution, in which we united in our call for an open market that will allow us to continue to supply the natural resources that produce clean-burning, American-made renewable ethanol.

NFU was among the first organizations to support the Renewable Fuel Standard, which many saw as a reach that would draw too much fire from oil companies and policymakers. Even when many in our own industry urged caution and advised against rocking the boat, we knew that when opportunity knocked, we needed to answer.

A decade later, the RFS is an unqualified success and has been critical in maintaining corn prices and the rural economy. But, as a demand driver, the RFS is done—it caps corn ethanol at 15 billion gallons per year and we have reached and exceeded that level. Future growth must meet true demand, and that demand is blocked by unnecessary, arbitrary and baseless regulations. But the good news is we have identified both the pathway to true demand and the regulatory roadblocks that need to be removed.  

And, we need to do it now. As was the case in 2002, when we first supported the concept of an RFS, we need to rock the boat and look beyond the limits imposed on us. All our members are painfully aware that we are in the midst of a prolonged period of commodity prices below the cost of production. The irony of the RFS is that it created such demand that our farmers responded with fantastic increases in yields and efficiencies, creating surpluses in corn that allow us to exceed all demands for food, feed and fuel.  And what's the most underutilized of those markets? Fuel.

Ten percent ethanol blends has a nice ring to it, until you put it in perspective: We still are captive to 90 percent gasoline. Sure, E15 is a step in the right direction, but we have the feedstock capacity in the form of corn to double that. Why don’t we?  Well, that’s where our resolution from San Diego should serve as a rallying point for our members and, hopefully, all of American agriculture, summed up in this key passage:

The more higher-blend ethanol fuel products Americans purchase, the more farmers, rural communities, our environment, and our state and national economies benefit. Now is the time for our nation to find and pursue bold and innovative strategies to dramatically expand the use of home-grown fuels from the farm.

The evidence is mounting that a blend of 30 percent ethanol might be the true sweet spot to take advantage of octane, while reducing harmful emissions and meeting future efficiency requirements. Working with partners such as the Urban Air Initiative and our many state chapters, we are supporting E30 demonstrations that, to date, indicate conventional automobiles can use this high-octane fuel with great results. We are working with governors across the Midwest to use E30 in state vehicles to continue to compile the real-world, in-use data we need to finally break through the regulatory barriers.

And to that end, NFU has expanded the Urban Air Initiative’s legal comments with the U.S. EPA, challenging the agency’s limit of ethanol blends above 10 to 15 percent to flex-fuel vehicles only. We argue that the EPA has misinterpreted a key provision of the Clean Air Act and should immediately reverse statements that indicate it is illegal to use higher blends in nonflex-fuel vehicles.

Despite the current glut of oil and low gasoline prices, the global quest for efficiency and lower carbon emissions will require clean octane, which ethanol can supply at a competitive cost, providing energy and economic security in the process. NFU will continue to work on opening the fuel market to meet those objectives and we urge all of you to join us as we rock the boat.

Author: Doug Sombke
President, South Dakota Farmers Union