Final RFS rule disappointing but farmers see some reason for hope

Final RFS rule disappointing but farmers see some reason for hope

Farmers, ethanol producers hoped for return to statutory RFS levels, but are grateful for advances over June proposal

The final RFS standard announced by the U.S. Environmental Protection Agency on Nov. 30 is sufficient to provide growth in the U.S. ethanol industry beyond the "blend wall" says Christopher Grundler, director of the EPA Office of Transportation and Air Quality.

In a telephone interview following the announcement, Grundler said that most of the overall reduction in the final rule standard from that authorized by Congress in 2007 reflects the problems the ethanol industry has encountered in the development of advanced fuel made from cellulosic materials such as corn stover instead of corn starch.

BLENDER PUMPS: More blender pumps like thiese at the Zarco station in Lawrence will allow consumers to choose to use higher ethanol blends.

"The cellulosic industry just hasn’t come on at the pace that we had hoped for," he said. "The final cellulosic standard is a realistic reflection of that fact."

He said the standard requiring 230 million gallons of cellulosic biofuel in 2016 is possible because of a change in the definition of cellulosic fuel that includes the production of biogas from municipal landfills.

"When you add that output to the projected production of the cellulosic plants that are currently in production, you see that the standard is achievable," he said.

The long overdue EPA action set standards for 2014, 2015 and 2016 set volume requirements for use in each of those calendar years. It also included volume requirements for biodiesel for 2014 to 2017.

While reducing the levels required in the legislation passed by Congress in 2007, the final numbers improved on the numbers originally proposed by EPA last June. The final target for renewable fuels was 18.11 for 2016, up 11% from 2014 production but off from the 22.25 billion in the 2007 law.

"We believe these standards provide a path for steady growth of the industry," Grundler said. "It provides for a growth in biodiesel to 2 billion gallons in 2017, double the minimum volume set by Congress."

He went on to say that he believes the recent action by the USDA to provide funds to help build out blender pump infrastructure will also help develop the demand for ethanol blends.

"We need consumers to be demanding more of these fuels and the initiative to build more blender pumps gives those consumers a chance to influence the markets," Grundler said. "But we feel the policy we have put in place is designed for growth."

Bob Timmons, president of the Kansas Corn Growers Association termed the announcement "positive" even though it didn't fully give the industry what it wanted.

"We didn't get everything we wanted, but EPA's announcement today is positive and moves the ethanol industry closer to an acceptable level. Even though EPA increased the ethanol levels over their original proposal, they are still below the statutory amount to comply with the Renewable Fuel Standard law," Timmons said.

 He said the effort of farmers in the face of stiff competition from the oil industry was commendable.

"When you look at the slick advertisements from Big Oil's well-funded smear campaign against ethanol, you have to be proud of the effort individual farmers made to get the message to EPA that ethanol is good for the environment, good for vehicles, and good for the economy," he said.

KCGA CEO Greg Krissek said the efforts of grassroots supporters were important in a long battle on the issue.  

"The final rule sets the ethanol levels for the years 2014, 2015 and 2016. It's kind of difficult to explain why EPA is just now setting levels especially for 2014 and 2015," Krissek said. "It has been a long process, and our growers and other ethanol supporters remained vocal throughout that process."

The RVO levels in the Renewable Fuel Standard are important to the ethanol industry because they provide market access to producers, who must sell their product primarily through the oil companies, their main competitor.

Kansas Corn Growers Association will continue to work with the National Corn Growers Association and other partners to evaluate options to protect farmers and consumers and ensure EPA follows the law in making decisions in the RFS.

Renewable Fuels Association President and CEO Bob Dineen expressed that organization's extreme disappointment in the final rule and said it is likely that the industry will go to court to fight for the full statutory requirements put forth in the 2007 law.

He said the decision effectively turns renewable energy decisions over to the oil companies.

"We are disappointed that EPA has missed an opportunity to support the most effective greenhouse gas reduction program anywhere in the world," he said. "How can President Obama make speeches about the importance of fighting climate change in Paris while his own EPA here at home is undermining that very program?"

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