With Friends Like This...

FROM THE AUGUST ISSUE: South Dakota Farmers Union President Doug Sombke discusses how the EPA's proposed Renewable Enhancement and Growth Support rule would hurt both the ethanol and agriculture industries
By Doug Sombke | July 13, 2018

The news we get out of Washington these days lies somewhere between incredible and laughable, particularly with our Environmental Protection Agency. There is no precedent for the anti-ethanol, pro-oil actions of a federal agency like we are seeing from EPA. And this is from an administration and an agency that professes to be a friend to ethanol. It reminds us of the old saying: “With friends like these, who needs enemies?” But let’s be clear: They are not friends to ethanol or, for that matter, agriculture.

In this last display of "support,” led by technocrats in Ann Arbor, Michigan, the agency has proposed to make the use of ethanol blends above 15 percent volume illegal and restrict such blends to flex-fuel vehicles (FFVs). This comes on the heels of recent waivers granted by EPA to refiners who have failed to comply with the law of the land—the Renewable Fuel Standard—requiring the petroleum industry to include a modest percentage of fuels derived from renewable resources. 

A previously established market of at least 15 billion gallons has been whittled down by 2 billion gallons, effectively reducing corn demand by nearly 700 million bushels. With many of our farmers already operating below the cost of production, this is another blow. It also comes at a time when EPA is grappling with federal fuel economy standards and the need for high-octane, low-carbon fuels—a job description ethanol fills perfectly when used in higher blends. The Department of Energy has long endorsed the use of blends between 25 and 40 percent as the sweet spot for ethanol in terms of price, octane and emissions. Here in South Dakota, a joint effort by corn growers and ethanol producers continues to demonstrate E30 blends in conventional vehicles with tremendous success and no problems whatsoever. And that is important because, in another ironic twist to this story, FFVs have been put out to pasture thanks to EPA. Automaker incentives to produce such vehicles have been all but eliminated and the fact is, the higher blends are more efficient in conventional vehicles.

EPA has all the legal authority it needs to extend the vapor pressure rules to allow year-round use of E15 and higher blends, but has not included such a rule or even proposed to do so. Nor has it approved an E30 certified fuel by which auto manufacturers can vigorously test new models to enable them to optimize and provide warrantees. Yet, EPA has the time and resources to pull out an Obama Administration proposed rule that the Trump Administration should throw away. 

The rule proposed by EPA is called Renewable Enhancement and Growth Support and is the answer to a question no one in the ethanol industry asked. But one does not need to be a master detective to conclude who would ask for such an action: the petroleum industry. Is there any precedent for an industry to have a federal agency cap its competition? It is so outrageous it is hard to really grasp. 

Not only does such an action cap the volume of ethanol but it relegates it to its lowest value. Its highest value is to provide octane and reduce the toxic carcinogens in gasoline while offering consumers a significant cost savings at the pump. Left unchallenged, the oil industry would have a guaranteed 85 percent of the motor fuel market for light-duty vehicles. The 15 percent share left for ethanol would be used for octane but the oil industry would continue to make a huge profit off the lower price it pays for that ethanol, all the while continuing to unnecessarily poison the air all Americans breathe.

The ethanol industry, farmers everywhere, environmentalists and health advocates should share a common goal of having this rule scrapped. Proponents of a free market should be appalled at the intervention of a federal agency in the market. Consumers should be outraged that a lower-cost, healthier fuel is intentionally being denied to them by the very government agency charged to protect them. In fact, anyone other than someone who makes a profit off gasoline should make defeating this rule a high priority.
 

Author: Doug Sombke
President, South Dakota Farmers Union
dsombke@sdfu.org