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Ethanol Will Face RFS Threat
Corn ethanol had dodged the latest bullet in Congress, but attempts to weaken or repeal the Renewable Fuel Standard are likely to be attached to must-pass legislation in Congress all year.
That’s the consensus of lobbyists and ethanol advocates who spoke Tuesday at the Iowa Renewable Fuels Summit near Des Moines, Iowa, Tuesday.
The most recent attack was an amendment in the Senate to the stalled Keystone XL Pipeline bill. An amendment proposed by Senators Pat Toomey (R-PA) and Diane Feinstein (D-CA) to strip corn ethanol from the Renewal Fuel Standard didn’t come up for a vote. On Monday, Democrats managed to delay the bill by blocking Senate leaders’ attempts to wind down debate.
“I think for right now, there’s not going to be an immediate vote on this thing, but we do have to work this,” retired General Wesley Clark said of the Toomey-Feinstein effort. Clark, co-chair of the ethanol lobbying group, Growth Energy, visited with Agriculture.com shortly before delivering his keynote speech to members of the Iowa Renewable Fuels Association.
Another ethanol industry leader, Renewable Fuels Association president Bob Dinneen (who wasn’t at the Iowa meeting Tuesday) told Agriculture.com recently that he didn’t expect the Toomey-Feinstein amendment to get a vote.
“I think [Senate Majority Leader Mitch] McConnell and the Republican leadership understand this is an issue that divides the caucus,” Dinneen said. Both parties have supporters and opponents of ethanol, which could make changing the RFS a challenge for opponents in the oil industry.
Yet farm group lobbyists who who spoke at the meeting Tuesday were hardly complacent about the RFS.
“For sure we will see a vote this year in the Senate on some kind of RFS reform,” predicted Amanda De Jong, senior policy adviser at the Iowa Corn Growers Association.
A bill or amendment to completely repeal the RFS would be easier to defeat than one that would weaken the RFS with some kind of reform, said De Jong, who has worked as a special assistant at USDA and as an agricultural adviser to Senator Chuck Grassley (R-IA).
“I think we’ll be able to protect that from passing in the Senate,” she said.
Others predicted an ongoing battle because amendments to kill or weaken the RFS could be attached to one of several bills Congress will need to pass this year, said Catharine Ransom of the Glover Park Group and one-time staffer for former Senator Max Baucus (D-MT).
Ransom said that not only ethanol plant owners will need to contact members of Congress. So will farmers and others in agricultural industries.
Ransom said people ask her, “Well, I’ve talked to these people for the last five years. Do I need to do it again?”
“The answer is, yes.” Ransom said.
Besides urging Congress to continue its support for the RFS, ethanol leaders Tuesday urged Iowa members of the industry to attend next year’s presidential caucuses to support candidates who back the RFS.
Monte Shaw, executive director of the Iowa Renewable Fuels Association, urged everyone at the meeting to join a new bipartisan group, America’s Renewable Future. That organization will work to inform presidential candidates who visit the state about the importance of renewable fuels to the economy of Iowa and the nation.
Wesley Clark left no doubt that he sees renewable fuels as the key to reviving the U.S. economy.
Clark graduated first in his class at West Point and rose to the rank of four-star general as NATO’s Supreme Allied Commander, Europe.
Tuesday he outlined five challenges that this nation faces that are likely to be as difficult as the Cold War: terrorism, cybersecurity, an unstable global financial system, the rising military and economic power of China, and a changing climate.
“Those five challenges all have something in common. They’re all long-term,” Clark said.
“They require leadership,” he said, adding that right now the nation is badly divided politically.
“I think the way we come together is to rebuild the American economy,” said Clark, who ran for president as a Democrat in 2003.
Clark cited several ways to rebuild the economy, including educating more scientists and engineers. But that will take years.
“The quickest fix for the economy, believe it or not, is energy,” he said.
In 2008, America’s imports of oil contributed about $500 billion to the nation’s trade deficit, he said. This year, with falling oil prices, it will be about $100 billion.
“If we could keep that money in America’s economy, that would accelerate economic growth,” he said.
Clark is on the board of BNK Petroleum, an energy company focused mainly on shale gas in North America and Europe.
“We’re not going to be energy independent relying on oil alone,” Clark said.
Biofuels are sustainable, but shale oil wells are short-lived, he said. Production from typical wells using fracking technology declines between 70% and 90% in a year, he said. As oil companies slow down drilling in North Dakota and other oil states, 12 months from now, U.S. shale oil production “should be less, a lot less,” he said.
Another big oil producer, Russia, lags in technology and capital investment.
Clark didn’t predict how long the current low prices would last.
“The only sure thing anyone can say about the price of oil is that any prediction is going to be wrong,” he said.
Some are predicting $20-a-barrel crude.
“I think it’s possible but unlikely,” Clark said.
Clark said that part of the fall in crude oil prices “was fed by financial speculation.” Buyers of crude oil futures have been shorting the market, he suggested.
Even though demand for oil has fallen, one of the world’s biggest importers, China, is still growing at a rate of 7.5%, Clark added.
At some point, global production will be more in line with rising demand, and prices will go back up.
“The one thing you can be sure of is that the world demand for oil will increase,” he said.
Ethanol and renewable fuels can make the U.S. economy stronger in that environment, he said, if ethanol and biofuels are allowed access to the market.
“And it starts right here,” Clark said to a round of applause.