Biofuels group: Big Oil also behind ethanol waiver requests

A biofuels industry group says pressure from lobbyists is causing governors to push to relax the renewable fuel standard (RFS). 

They say the pressure from lobbyists has as much to do with the interest of governors as a drought affecting much of the country.

Governors in Arkansas, Delaware, Maryland and North Carolina have petitioned the Environmental Protection Agency (EPA) for a one-year waiver from the RFS, citing rising food prices in the wake of a drought that has ravaged corn yields. Meanwhile, Iowa Gov. Terry Branstad on Wednesday sent a letter urging EPA to maintain the RFS.

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The issue has attracted more attention than it did in 2008, when only Texas Gov. Rick Perry (R) formally asked for an exemption. EPA opened a 30-day comment period this week on the Arkansas and North Carolina waiver requests and must rule on them within 90 days.

Monte Shaw, executive director with the Iowa Renewable Fuels Association, credits the uptick in gubernatorial and congressional interest to oil groups viewing 2013 as the last chance to nix the RFS before it forces them to change business practices.

“2013 is the last chance to dismantle the RFS before it actually does something, so that means the 2012 election is very important, so they’re doing a lot of things to set it up,” Shaw said. “When the waiver’s denied, and it will be, you will see statements to the effect of, ‘Oh, we couldn’t even get this changed during a drought.’ ”

In 2014, refiners will be required to blend 14.4 billion gallons of corn-based ethanol into traditional transportation fuel. Given corn supply shortages and depressed gasoline consumption, Shaw said refiners will likely exhaust corn ethanol refining credits to meet RFS obligations this year and next.

Shaw said that means refiners in 2014 will need to produce gasoline with a higher ethanol content, pay fines or hope other refiners overproduce that fuel and buy credits from them. All those would “break petroleum’s monopoly,” he said.

Brydon Ross, director of energy and environment policy with the Council of State Governments, said he believes refiners can meet the 13.2 billion gallon RFS blending requirement this year. But beyond that is uncertain, which is why lawmakers and governors have pushed for the waivers.

Ross said the drought and concerns about inflation are driving state governors’ waiver requests more than anything. He noted the states petitioning for a waiver host significant agribusiness operations that are adversely affected by rising corn prices, which hit record highs this summer.

“I don’t doubt that there are advocacy groups who believe there are political motives. Of course there are — we’re talking about politics in Washington, D.C.,” Ross told The Hill on Thursday. “But we’re really talking about a physical supply shortage.”

He also noted that between 2008 and 2012, the amount of U.S. corn acreage dedicated to ethanol production rose from 25 percent to 40. On top of that, the drought will generate the lowest corn yield since 2006.

“I think the drought has made it more acute. There’s always been a healthy debate about the RFS,” Ross said. “I have a hard time believing 180 members of Congress and more than a quarter of the Senate asked for a waiver based on oil interests.”

--This story was updated at 2:00 p.m.