House hearing focuses on COVID-19 recovery for energy sector

By Erin Voegele | June 16, 2020

The House Committee on Energy and Commerce’s Subcommittee on Energy held a hearing Jun 16 focused on ways to revive the energy industry, which has been negatively impacted by the COVID-19 pandemic.

Although the event focused primarily on the renewable electricity and energy efficiency sectors of the energy industry, Ernest Moniz, president and CEO of the Energy Futures Initiative, briefly addressed biofuels during his testimony.

With breakthroughs, he said low-carbon fuel technologies, such as advanced cellulosic biofuels and renewable natural gas (RNG) can play critical roles in the U.S. energy sector, provided innovation significantly lowers their cost. In general to support recovery and innovation in the entire energy sector, he said the federal budget for research, development and demonstration will need to double or triple over the current decade. “We need a supercharged decade of across-the-board clean energy innovation with no time to spare,” Moniz said.

The Renewable Fuels Association submitted a letter to the Subcommittee on Energy in advance of the hearing that stressed the significant economic harm the renewable fuels industry has experienced as a result of the COVID-19 pandemic.

“As Congress continues to consider aiding those sectors of the economy hardest hit by the pandemic, we urge you to ensure the renewable fuels industry is not left behind,” wrote Geoff Cooper, president and CEO of the RFA, in the letter. “As you know, protecting the health and soundness of the renewable fuels industry is vital to the economic prosperity of rural America.”

In his letter, Cooper notes that more than half of U.S. ethanol plants were forced to idle or significantly reduce production due to market impacts caused by COVID-19. More than 8 billion gallons of production came offline in just seven weeks, he said, a volume representing 52 percent of total U.S. annual production capacity.

“It was the most rapid and precipitous drop in production in the industry’s history and impacted more than just renewable fuel production,” Cooper added. “Other critically important products manufactured at ethanol plants were also affected—livestock feed (called “distillers grains”), corn distillers oil and carbon dioxide gas used in food and beverage markets, wastewater treatment, medical uses, and other applications. The impacts across rural America and consumer goods are still being felt, even as the nation begins to emerge from quarantine.

“Importantly, the ethanol industry was already suffering from the international oil glut created by the dispute between Saudi Arabia and Russia that drove prices for all liquid fuels to their lowest point in several decades,” Cooper continued. “The combination of global oil market forces and government-imposed COVID-19 shutdowns has left the U.S. ethanol industry on the brink of disaster.”

According to Cooper, U.S. ethanol sales are expected to fall by $10 billion this year, while the industry’s contribution to gross domestic product (GDP) could fall by nearly one-third. Farmers will also be impacted, as ethanol provides a market for two-fifths of U.S. corn production and more than a third of the nation’s annual sorghum crop.

In the letter, Cooper urges congress to consider including direct financial support for the U.S. ethanol in any future COVID-19 stimulus bills. “This assistance would help restore jobs in the ethanol industry and resuscitate the rural economies that depend on their local ethanol plants to boost the tax base and drive economic activity,” Cooper said.

Coopers letter also describes the ethanol industry’s work to help ensure access to hand sanitizer products during the pandemic and difficulties caused by inconsistent and confusing regulatory guidance on hand sanitizer from the U.S. Food and Drug Administration. He also discusses the U.S. EPA’s mismanagement of the small refinery exemption (SRE) program under the Renewable Fuels Standard and uncertainty surrounding the agency’s current silence regarding RFS waiver requests submitted by several state governors.   

“We simply ask that the RFS be implemented as Congress intended, and that EPA cease its senseless quest for ways to undermine the nation’s most successful renewable fuels program,” Cooper concluded. “Now, more than ever, the ethanol industry needs the certainty, stability and assured market access that the RFS was intended to provide. Now is not the time to see it eroded by an Agency that appears intent upon boosting the profits of oil companies at the expense of farmers and consumers across the country.”

A recording of the hearing is available on the House Committee on Energy and Commerce website.