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Defense policy analysis, commentary and discussion.
A House panel’s decision to look back at mandates set in the 2007 renewable-energy law could be a pivotal moment for industries hoping to slow down growth in the ethanol industry.
The Energy and Commerce Committee, which helped write the Renewable Fuel Standard, is taking comments on the effect of mandates for commercial use of conventional ethanol, cellulosic ethanol, advanced biofuels and biodiesel. So far, the panel has issued two white papers on the policy and plans three more in a bipartisan attempt to depict RFS successes and failures. Committee leaders also may use the process to provide guidance to the EPA, which reviews and sets the renewable-fuel mandates.
Congress created federal mandates for commercial use of renewable fuels in a 2005 energy law (PL 109-58) and then raised them in 2007 (PL 110-140). At the time, lawmakers wanted “homegrown” alternatives to foreign oil amid expectations that America’s thirst for gasoline and dependence on imported crude would continue to climb. Now, however, discoveries of oil and gas shale deposits in the United States have boosted oil production in this country, while U.S. gasoline consumption has declined because of the recent economic downturn and a population that is driving less often and doing so more fuel efficiently.
Charles T. Drevna, president of American Fuel and Petrochemical Manufacturers, sees the committee movement as a sign that lawmakers may be ready to end “social engineering” through renewable-fuel mandates, especially for conventional or corn-based ethanol. Production of cellulosic biofuel — fuel derived from sources other than corn starch — is below RFS targets set in the 2007 law. EPA has kept mandates for the overall class of advanced fuels at statutory levels, which includes the targets for biodiesel. The agency has adjusted cellulosic mandates to reflect companies’ difficulties in devising production technology, establishing reliable energy feedstock suppliers and overcoming investors’ reluctance to put money into developing industries.
Under the energy mandates, a total of 36 billion gallons of renewable fuels will be produced and used by 2022. The cap for corn ethanol is set at 15 billion gallons by 2015.
Drevna thinks his association of oil refiners and an alliance of livestock groups, environmental organizations and the food industry are inching closer to their shared goal of repealing the RFS. Still, he cautioned, “The problem is, will Congress look at itself in the mirror and say, we made a mistake?”
Bob Dinneen, president and CEO of the Renewable Fuels Association, says there is nothing wrong with the policy. The mandate for conventional ethanol has created markets for the alternative fuel, he says, and it’s the oil industry’s continued opposition that has created whatever problems exist.
“I don’t expect there to be any change in the Renewable Fuel Standard,” Dinneen said. “The oil industry is trying to flame the fires of discontent.”
Those fires cover a lot of territory. The RFS has become a dividing line between corn growers who have seen crop prices rise with the ethanol market’s expansion. The end of cheap corn left the livestock and poultry industry grumbling over higher animal feed costs. For oil refiners, the RFS is a point of contention because it requires them to meet their obligation by either buying certificates or credits known as renewable identification numbers or buying more ethanol each year to blend with gasoline.
The Future of Ethanol
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