By Zack Colman - 08/05/12 10:00 AM EDT
Eight biofuels groups are forming a coalition to coordinate messaging to combat calls to limit a federal mandate for renewable fuels because of the drought.
The groups said the drought has raised the profile of the renewable fuel standard, which requires 36 billion gallons of renewable fuels to be blended into traditional transportation fuel by 2022.
Various lobbying groups argue this requirement should be waived because of the drought, which they say has caused the price of corn used for food and animal feed to skyrocket.
“There’s a lot of hype and hyperbole going on by the industrial livestock producers and the petroleum refiners,” Erickson said. “Our goal is to make sure that our voice is heard and that the facts are out.”
The new organization, called the Biofuels Producers Coordinating Council, aims to defend the renewable fuel standard. That rule requires 15 billion gallons of corn-based ethanol to be blended into traditional transportation fuel by 2022. The remaining 21 billion gallons of that rule will be filled by advanced biofuels such as cellulosic ethanol, which is not yet produced at commercial scale.
Several lawmakers representing livestock producers and dairy farmers have argued against the corn portion of the rule, which they say is contributing to high feed prices. But they have offered support for the cellulosic portion of the rule. Erickson said the two are intertwined and that the defeat of part of the rule would send bad signals about all biofuels to investors.
Representatives from the Advanced Biofuels Association, Advanced Ethanol Council, Algal Biomass Organization, American Coalition for Ethanol, Biotechnology Industry Organization, Growth Energy, National Biodiesel Board and Renewable Fuels Association will comprise the coalition.
Erickson says those who want to repeal the RFS have latched onto a false claim about ethanol’s effect on corn prices. Ethanol refiners already have responded to market signals by cutting back ethanol production because of high corn prices, he said.
Corn speculation has more to do with high prices than the RFS, ethanol trade group Growth Energy CEO Tom Buis said Thursday. With corn stocks shrinking, commodities traders are banking on corn futures in hopes of a strong rebound when the drought ends, he said.
Erickson also cited a report by an Iowa State University professor that claimed ending the RFS would reduce corn prices by 5 percent at most.
Still, livestock groups said on Monday that a 5 percent drop in prices would save their industry $1 billion. That is significant for ranchers who say they are having trouble finding affordable feed to keep all their livestock healthy, the groups said.
Erickson said the new group is not a short-term endeavor and will be a player in the debate over renewable fuels even after the drought ends.
“It kind of goes in cycles. So right now it’s livestock people squawking, a month ago it was the petroleum refiners people squawking,” Erickson said. “We’re creating a new market structure here. The incumbents don’t like the new guys coming in.”