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EPA tough on ethanol, tougher on biodiesel

Agriculture.com Staff 05/07/2009 @ 6:54am

Proposed rules released by the Environmental Protection Agency this week have the potential to keep new ethanol plants from selling into a government mandated market. But the biodiesel industry could fare even worse.

Members of the biofuels industry on Wednesday testified before the House Agriculture Committee's subcommittee on Conservation, Credit, Energy and Research. Manning Feraci of the National Biodiesel Board said the effect of the EPA's rule, if unchanged, would be to lock soybean-based biodiesel out of the revised renewable fuels standard. And, because of that, there would not be enough biodiesel available to meet a 2012 mandate under the 2007 energy bill that requires the nation to use 1 billion gallons of biodiesel.

The reason is that EPA appears to be counting increased soybean acreage devoted to biodiesel production as an incentive to clear rain forest and grasslands to grow soybeans in Brazil, even though Brazilian soybean production decreased from 2004 to 2008 while the U.S. biodiesel industry was ramping up from 25 million gallons to 690 million.

"This outcome is not consistent with either sound science or sound energy policy," Feraci said.

Also on Wednesday, groups like the American Soybean Association were trying to figure out how EPA managed to give soybean-based biodiesel a greenhouse gas emission estimate that's only 22% below petroleum-derived diesel fuel. Under the 2007 energy law, biodiesel has to be at least 50% better in order to qualify for the mandate and a tax credit that shave $1 a gallon off the price.

"It appears that they used a combination and picked and chose different parts of at least four different land use models," ASA president Johnny Dodson told Agriculture Online. "We are having difficulty trying to figure out exactly how they put all that together and came up with that number."

Biodiesel has always been considered an energy-efficient, green fuel that gives back about three times as much energy as it takes to produce it. When indirect land use isn't included, a computer modeling program used by EPA and the Department of Energy has shown that biodiesel puts out 78% lower amounts of greenhouse gases than diesel fuel.

Under the law and EPA's proposed rule, existing ethanol plants will be grandfathered in and allowed to qualify for the renewable fuel standard even if they can't meet the greenhouse gas reduction mandated for that fuel, which is 20%. But when asked if existing biodiesel plants will be allowed to continue under the energy program, Dodson said, "It's my understanding, no."

Dodson, a farmer from Halls, Tennessee said that if biodiesel isn't allowed in government-mandated blending with diesel fuel, it could hurt the price of soybeans. That's because food companies have shifted from using hydrogenated soybean oil in products like baked cookies to using palm oil, which has no transfats. That's cut demand for soybean oil by about 2.5 billion pounds.

"The soybean excess, if you want to call it that, has been soaked up by the biodiesel market," he said.

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