Fuels America Responds To Anti-RFS Claims From API, Others

Ethanol Producer Magazine

March 11, 2015

By Erin Voegele

On March 11, Fuels America hosted a media event featuring leaders in the U.S. ethanol industry preemptively responding to a call from the American Petroleum Institute, the Environmental Working Group and ActionAid to repeal the corn ethanol portion of the renewable fuels standard (RFS).

During a joint press event, the API, EWG and ActionAid repeated previously-debunked claims that the RFS will harm consumers and the economy, drive up food prices, and that higher ethanol blends will damage cars.

Tom Buis, CEO of Growth Energy, opened the Fuels America event stressing the API, EWG and ActionAid were repeating the same old misinformation that they’ve publicized before. "We are here to tell you the ethanol industry continues to innovate, get cheaper and cleaner, and increase America’s energy security, while creating jobs and benefiting the environment and consumers at the pump," he said.

Buis noted that at the recent Iowa Ag Summit, six out of nine republican presidential hopefuls expressed support for the RFS, noting that he thinks more politicians see the misinformation that Big Oil is dishing out.

Rob Elliott, first vice president of the National Corn Growers Association, spoke about the myth of food versus fuel, noting that research has shown that energy, transportation, marketing and packaging drive food price increases much more than raw materials costs. “There is about a dime’s worth of corn in a $4 box of corn flakes, which kind of tells that tale,” he said. Elliott also noted that corn prices are currently below the cost of production, and stressed that falling corn prices have not translated into lower food prices.

In addition, Elliott addressed the myth of crop expansion, noting that the law that establishes the RFS prohibits crop land expansion beyond 2007 levels. He also indicated that U.S. crop land has actually trended downward since the RFS was implemented, at the same time biofuel production has increased.

He also stressed that the RFS caps the amount of corn ethanol that can qualify for the program at about 15 billion gallons. The industry is already operating at an annualized rate of approximately 14.7 billion gallons, so the cap is essentially been reached. “There will be no massive expansion of first generation biofuels in the U.S.,” he said, noting that future increases in RFS requirements are likely to be met with biofuels manufactured from cellulosic and waste-based feedstocks.

Finally, Elliott noted that even with the RFS, more grain is available today worldwide for food than has been at any point in history. “We’ll actually finish this marketing year with huge piles of corn left over as we move into the 2015 harvest,” he said.

Adam Monroe, president of Novozymes America, spoke about the investments his company has made in both the first-generation and second-generation biofuel sectors as a result of the RFS. Regarding cellulosic production, Monroe noted the price of enzymes has dropped by 90 percent when compared to prices just a few years ago. He also spoke about progress with first-generation technologies, noting his company has spent a lot of investment, time and effort to improve the sustainability and efficiency of grain-ethanol production. As a result of these improvements, a typical ethanol plant can produce the same amount of ethanol annually with 22,000 tons less corn. “We’ve invested more than $500 million into North America,” Monroe said, noting Novozymes plans to spend hundreds of millions more, as long as biofuel policy continues.

According to Monroe, the RFS has driven a lot of private sector investment. However, if Congress or President Obama give in to oil lobby efforts to weaken the RFS, that investment could go away. He added that the ongoing argument over policy also helps weaken the investor community. This is no doubt a tactic to try to create uncertainty in the biofuels space, he said, adding that efforts to dismantle the RFS make it difficult to attract new investors into the advanced biofuel space.

Bob Dinneen, president and CEO of the Renewable Fuels Association, also stressed there will be no massive U.S. expansion of corn-ethanol production. “The [RFS] is designed specifically to drive investments in new technologies, using new feedstocks,” he said.

Dinneen encouraged those on the Fuels America call to question the API, EWG and ActionAid on how they’d explain the fact that the price of corn has dropped since the RFS was passed, that two of the lowest food price inflation rates of the past 50 years have occurred over the past six years, and that the UN acknowledges that hunger worldwide has fallen. He also noted the dead zone in the gulf has shrunk while the RFS has been in pace due to more efficient farming practices, and that U.S. forest area has actually increased. “Their doomsday scenarios make no sense, and people just need to question and reflect what they say against what is actually happening,” Dinneen said.

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