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Ethanol mandate safe, for now

DANIEL LOOKER 08/27/2013 @ 5:31pm Business Editor

The top lobbyist for a South Dakota-based ethanol trade group said Tuesday that repeal of the Renewable Fuel Standard in unlikely in Congress this year.

"The repeal of the Renewable Fuel Standard is already off the table," Brian Jennings, executive vice president of the American Coalition for Ethanol told the group's members at their annual conference in Des Moines, Iowa.

Jennings said the RFS, part of the 2007 Energy Independence and Security Act, was never in any danger in the Senate, where enough members of both parties still support the requirement that oil companies blend steadily increasing amounts of biofuels each year through 2022.

The House of Representatives, he said, has given up on repealing the law and is now focusing on what ethanol opponents call reform.

One of those efforts would reduce levels of cellulosic ethanol required in gasoline. Jennings said the Environmental Protection Agency has the authority to do that if not enough is being made to meet the levels set out in the 2007 energy law. EPA has done that several times, most recently in mid-August when its final rule for 2013 cut the cellulosic ethanol mandate from 14 million gallons proposed earlier this year to 6 million. Both are a tiny fraction of the 13.8 billion gallons of mostly corn ethanol to be blended in 2013.

Jennings said that Representative Henry Waxman, the ranking Democrat on the House Energy and Commerce Committee, is opposed to changing cellulosic ethanol targets in the law.

A second so-called reform would lower the mandate for corn ethanol below 10% of gasoline, the content currently sold in nearly all of the nation's motor fuel. That, said Jennings, is opposed by Representative John Shimkus, an Illinois Republican who heads the same Energy Committee's subcommittee on Environment and the Economy. Shimkus is a strong supporter of biofuels and helped write the first RFS that was adopted in a 2005 energy law.

A third idea is to change or weaken trading of Renewable Identification Numbers (RINs), the credits oil companies can buy instead of blending ethanol. That faces opposition from inside the industry from companies benefitting from the sale of RINs, Jennings said. Prices have skyrocketed this year to well above $1 a gallon.

However, Jennings supports an inquiry into the causes behind high RIN prices.

"I welcome the opportunity for EPA to look into what oil companies and speculators are doing with RINs and so should you," Jennings said. 

Jennings said the industry still is likely to face challenges. The EPA has also said publicly that it could reduce the RFS for 2014 in an announcement he expects sometime next month. The industry will have to work with the EPA, which administers the RFS, to make sure lower levels don't harm ethanol producers, he said.

"I'm not here to say we're entirely safe," he said.

Later, when an ACE member asked if supporters of ethanol in the House may be targeted for defeat in 2014 elections, Jennings said he had not heard that Shimkus is in any danger. Representative Collin Peterson of Minnesota, the House Ag Committee's ranking Democrat, may face a strong challenge as a result of partisan politics in the farm bill debate, Jennings said.

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