Biofuels industry: Waiver requests on renewable fuels standard rattling investors

Many livestock and poultry firms fear they cannot afford to continue operations at full scale during the drought, which has choked corn supplies and driven up the price of feed. They claim relaxing the RFS could bring prices down — an argument the biofuels industry vehemently refutes.

Biofuels groups see the corn ethanol requirement as the linchpin for the industry’s main goal: developing advanced biofuels. Commercial advanced biofuels plants are starting to come online this year, but much private investment is needed to meet the RFS requirement of blending 21 billion gallons of it into traditional transportation fuel by 2022.

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Erickson said the governors requesting relief from the corn ethanol quota all host significant livestock operations in their states. He said getting a corn ethanol RFS waiver to help that industry could kill private-sector confidence in advanced biofuels.

“The advanced biofuels industry is not the economic powerhouse in any state, of course, but it’s producing some key economic benefits and is poised to do so going forward,” Erickson said.

Still, the EPA has authority to waive the RFS if meeting its targets causes severe environmental or economic harm. But that causation has been difficult to prove.

Adam Monroe, president of biotechnology firm Novozymes North America, said during the call that “the economic harm has come from the drought, not the biofuels producers.” EPA said the same when it rejected Texas Gov. Rick Perry’s (R) RFS waiver request in 2008.

In any event, the drought could well be over before EPA needs to decide on the waiver requests. EPA has 90 days to issue a final ruling on requests made last week, putting the deadline after the drought is scheduled to end — and after the national election.