Fuels America members talk about EPA proposal, vow to fight back

By Holly Jessen | November 15, 2013

Fuels America held a media call on Nov. 15, reacting to a U.S. EPA proposal that would lower the required volumes of both conventional ethanol and advanced biofuels in 2014. Participating were representatives from the Renewable Fuels Association, the Biotechnology Industry Organization, the National Farmers Union, Poet LLC and Growth Energy.

The EPA’s is seeking comment on its proposal for the 2014 renewable volume obligations (RVO) for the renewable fuel standard (RFS). First, the proposal needs to be published in the Federal Register, which kicks off a 60-day comment period.

Bob Dinneen, RFA’s president, spoke first, pointing to the expected record corn crop of 14 billion bushels and saying it is the wrong time to reduce the renewable fuels required volumes. “The minute you introduce blending capacity or blend wall considerations, into a decision as to whether or not to waive the program is the minute you take the nation’s renewable fuel policy away from the statute and you put it in the hands of the oil companies, who do not want to invest in the infrastructure to allow more than 10 percent blends to be used,” he said. “It makes no sense.”

The RFA also pointed out in a press release that the EPA does not have the statutory authority to lower the RVO by more than the total reduction in advanced and cellulosic gallons and said it cannot stand. The “blend wall” doesn’t qualify as grounds for a general waiver of RFS volumes. Severe economic harm or inadequate domestic supply of renewable fuels must be proven for a general waiver and those conditions do not apply.  

Next up was Brent Erickson, executive vice president of BIO’s industrial and environmental section. BIO is baffled by what it considers a radical change in posture from the EPA, he said, pointing out that the RFS was formulated by Congress to push past the blend wall. “We think this rule will create an intolerable amount of uncertainty and undercut investments for the advanced biofuels industry,” he said, adding that investors were already nervous before this development.

He sees three possible fallouts, should this proposal be finalized. First, existing investments in advanced biofuels would become stranded, putting existing jobs at risk. Development of advanced biofuel feedstocks would slow or stop completely. Finally, new technology, which is just now reaching commercial readiness, could be derailed. He also pointed out that many companies have already invested more than $5 billion into advanced biofuels and created more than 7,600 permanent jobs.

Roger Johnson, president of the National Farmers Union, said if the proposal becomes final it would have direct negative impacts on farmers and that it sends a message from the EPA that rural development will stop and actually go backwards. Corn prices are down, leaving a breakeven point for farmers that is at about $4 or $4.50 a bushel. With one more good corn crop, farmers will be struggling to make ends meet. On top of that, this proposal sucks half a billion bushels of demand from the corn market. “This is a proposal that we are deeply, deeply disappointed about,” he said.

Jeff Lautt, CEO of Poet LLC, said the company is very troubled by the proposal. “We are shocked by the numbers that are in the proposal that says, not only are we going to slow down the vision and the plan of continuing to create an alter to gasoline and cop for American consumers, but we are going to maybe retreat from and turn back the numbers,” he said. “It is a grave concern to us, a company who has invested millions of dollars, not only in building corn-based ethanol business, but is at the heels of commercializing cellulosic ethanol as well. It seems like it would be handing a complete win to the oil industry.”

He also pointed out that many people incorrectly think it’s an either or situation with corn-based ethanol and cellulosic ethanol. “The fact is, all of the technology that we have developed, all the infrastructure, the investment that we have made, has been made on the foundation of our corn ethanol business,” he said.

Tom Buis, CEO of Growth Energy, also said he was disappointed in the proposal. He went on to stress that it hasn’t been finalized and that Growth Energy would be submitting comments in an effort to convince the EPA to make changes before the final rule comes out, something other speakers said as well “I would remind everyone it is a proposal, and I know all of us on the call today and everyone in the sector will be working hard to show that … their rationale was incorrect,” he said. “We should be moving forward, not backwards.”

He also pointed out only five years have passed for a 15-year policy that is working to save Americans money at the gas pump. “Now is not the time to turn back on the progress we have made and ask Americans to pad big oil's already record profits,” he said in a press release. “In its current form, this rule would freeze innovation or investment in next generation biofuels; reduce production of conventional biofuels; harm our environment and jeopardize savings to consumers.”