BigEthanol:TheRFScanhelpmitigategas

Big Ethanol: The RFS can help mitigate gas prices! CBO: The RFS is going to cause higher gas prices.

posted at 8:41 pm on June 26, 2014 by Erika Johnsen

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Well, this is rich.

In light of the recent political turmoil in Iraq and the potential for disruption to the global oil supply, Big Ethanol would like you to know that the Renewable Fuel Standard — i.e., the mandate through which the federal government forces you to buy ethanol by forcing U.S. refiners to blend an ever-increasing volume of so-called biofuels into the country’s oil supply — is a great way to enhance our domestic energy security and mitigate the impact of any surges in gasoline prices. They even made an advertisement about it, via HuffPo:

The liberal group Americans United For Change released a new television ad Thursday tying the fight over domestic renewable fuel standards to the situation in Iraq.

The ad highlights concerns that the current violence in Iraq may cause an increase in gasoline prices. “More chaos over there means higher prices here,” the ad warns. …

The group said the ad buy is worth $400,000. The ads will run in the Washington, D.C. area this Sunday during “Meet the Press,” “Face the Nation,” “This Week,” “Fox News Sunday” and “60 Minutes.” They will also run on MSNBC, CNN and FOX News next week. In addition, the group said it’s planning an “aggressive digital media campaign.”

When Congress first enacted and later expanded the Renewable Fuel Standard in 2007, lawmakers were relying on the crucial assumption that Americans’ demand for gasoline would continue to increase ad infinitum. Instead, innovation, greater fuel efficiency, and an economic recession resulted in slackening demand for gasoline, making the RFS’s requirements and the inherent subsidy for ethanol producers therein costly and unworkable for everybody else. The EPA finally started to acknowledge this reality last year and is currently mulling over whether to relax the requirements for 2014; that’s an eventuality that the Big Ethanol lobby desperately wants to avoid, and it’s trying to capitalize on the Iraqi instability to gin up more support for the mandate that sustains the bloated ethanol industry.

We already knew that the ad’s argument that ethanol means “less pollution” is totally bogus, but as for this latest claim about the Renewable Fuel Standard being a helpful policy to put downward pressure on gas prices? Yeahhhh… no, via The Hill:

Gasoline’s price will increase up to 9 percent, and diesel fuel will rise by up to 14 percent by 2017 because of the Renewable Fuel Standard (RFS) if Congress does not repeal it, the Congressional Budget Office (CBO) said Thursday.

The CBO’s analysis estimated that, in order to comply with the increasing mandates called for under the Energy Independence and Security Act, fuel refiners would have to more than triple their use of advanced biofuels by 2017, and would have to use much more ethanol in gasoline than the 10 percent blend that older vehicles can tolerate. …

The agency predicted that the Environmental Protection Agency, which oversees the RFS, will keep the mandate levels similar through 2017, since increasing them “would require a large and rapid increase in the use of advanced biofuels and would cause the total percentage of ethanol in the nation’s gasoline supply to rise to levels that would require significant changes in the infrastructure of fueling stations.”

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Tags: biofuels, CBO, Environmental Protection Agency, ethanol, gas prices, lobby, Renewable Fuel Standard

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Oh,noes:80percentofbiofuelsproducershave

Oh, noes: 80 percent of biofuels producers have cut back production due to federal-mandate uncertainty

posted at 6:01 pm on May 15, 2014 by Erika Johnsen

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Well, who woulda’ thunk it? The Environmental Protection Agency finally decided to acknowledge the incompatibility of the Renewable Fuel Standard with both America’s declining gasoline consumption and the environmental degradation caused by the production of corn ethanol, thereby obliterating the entirely government-imposed “market” for biofuels — and what do you suppose happens? Via The Hill:

Almost eight in 10 biodiesel producers in the United States have cut back production this year due to uncertainty over federal policies that encourage making the fuels, the National Biodiesel Board (NBB) said.

The report released Wednesday was based on a survey the NBB conducted. In addition to the finding that 78 percent of producers reduced output, 57 percent of companies have idle or shut down plants and 66 percent have reduced their workforces or are considering it.

Almost all of the surveyed companies attribute the industry’s decline to two recent policy developments: the expiration at the end of last year of the tax credit to produce biodiesel and a proposal last year by the Environmental Protection Agency not to increase the biodiesel mandate in the Renewable Fuel Standard.

“Inconsistency in Washington is wreaking havoc on the U.S. biodiesel industry,” Anne Steckel, NBB’s vice president of federal affairs, said in a statement.

“Inconsistency in Washington is wreaking havoc on the U.S. biodiesel industry”? …Yeah, how about we go a little more big-picture and try, “The U.S. biodiesel industry’s utter dependence on handouts from Washington is wreaking havoc on the U.S. biodiesel industry,” perhaps? This major slowdown in production is precisely why, when the EPA announced late last year that they would be reevaluating the annually-increasing volumetric requirements mandated by the Renewable Fuel Standard for 2014 (a decision on which we’re still waiting, by the way), the biofuels industry flipped out — and their respective lawmakers have been engaged in a relentless pander-fest ever since, most recently at a Capitol Hill press conference on Wednesday including Democrat Sens. Heitkamp, Durbin, Klobuchar, Franken, Donnelly, and Cantwell:

“We want to make sure that biofuels are included in the future when it comes to America’s energy,” Durbin said. “When there’s uncertainty about the future of biofuels, there’s uncertainty about these jobs.”

Klobuchar and Franken said Minnesota officials have estimated that the EPA’s biodiesel mandate would cause the state to lose 1,500 jobs.

Yes, it’s always very easy to talk about the tragic loss of the jobs that have been created via direct federal largesse, but what these senators aren’t talking about is the opportunity cost, i.e. the other jobs that would have been created in other and more useful areas of the private sector, if the federal government wasn’t depriving taxpayers of those dollars in the first place. Much like the huge dropoff in the egregiously subsidized wind industry without the surety of their finely tuned array of precious subsidies, the fact that biofuels producers are cutting back without their own mandates and subsidies firmly in place should serve as a red flag about the real and economically (not to mention environmentally) costly nature of this industry.

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Tags: biofuels, energy, epa, ethanol, free market, Renewable Fuel Standard, subsidies

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Oh,good:TheEPAfinally,retroactivelylowersa

Oh, good: The EPA finally, retroactively lowers a 2013 biofuels requirement to reflect the fact that the required biofuels did not actually exist

posted at 8:41 pm on April 22, 2014 by Erika Johnsen

It’s an improvement, I suppose, over that one time last year when they actually tried to penalize refiners for not complying with the previous year’s standard which also vastly overestimated the amount of the required cellulosic biofuels that would exist in the real world rather than inside their self-righteous faux-green fantasies, but… that is hardly cause for celebration. Via The Hill:

The Environmental Protection Agency (EPA) on Tuesday retroactively lowered the volume of cellulosic biofuel that refiners must blend into traditional fuels, aligning the 2013 mandated volume to the actual amount of fuels produced.

EPA’s original mandate for 2013 was based on a projection that producers would make 6 million ethanol-equivalent gallons of cellulosic biofuel, but just over 800,000 gallons of the fuels were actually produced that year, the agency said. Tuesday’s action sets the cellulosic biofuel blend level at 0.0005 percent, reflecting the amount of fuel produced. …

The year is over, but EPA’s revision means that refiners will not have to use credits or pay penalties for not reaching the target.“Since the cellulosic biofuel standard was based on EPA’s projection of cellulosic biofuel production in 2013, EPA deemed this new information to be of central relevance to the rule, warranting reconsideration,” EPA said in its rule, noting that now that the year is over, its “projection” can be based on actual production.

Let me reiterate that. The EPA devised the standard with which refiners must lawfully comply based on the consistently inaccurate projections with which they plowed ahead for benefit of the two cellulosic biofuels producers in the country (one of which ended up drastically underperforming), and the agency only belatedly “deemed” the fact that those biofuels were not commercially available to be of “central relevance the the rule.” …Ya’ think?!

Sadly, I realize that this hardly even qualifies as “news,” really, since this is just kind of the business-as-usual way the federal government often goes about enforcing things and even more particularly the way the EPA goes about enforcing the Renewable Fuel Standard — but why is this hardly even noteworthy business-as-usual? I often refer to the RFS and all of the ghastly inefficiencies and regulatory vagaries it inspires as the “saga of stupid,” and I do not throw around the word “stupid” lightly. This, my friends… this is stupid. The unabashed cronyism and politicization of it all is enough to make your head spin.

Now, if only they would stop cowering from the sound and the fury of the Big Ethanol lobby and finally release the 2014 RFS standards sometime before the next presidential election…

Tags: biofuels, Environmental Protection Agency, ethanol, Obama administration, Renewable Fuel Standard

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APstudy:“Advanced”cornethanolmightactuallybe

AP study: “Advanced” corn ethanol might actually be environmentally worse than gasoline

posted at 5:21 pm on April 21, 2014 by Erika Johnsen

Last November, the Associated Press released their own study that confirmed more or less everything we already knew about the damaging unintended consequences created by the Renewable Fuel Standard: That the artificially jacked-up demand for corn incentivizes American farmers to bring marginal lands into agricultural production, effectively obliterating millions of acres of conservation land in favor of putting more strain on the water supply, pumping more fertilizer into the environment, and churning up more soil (subsequently releasing the carbon trapped within) than they otherwise would. The champions of the Big Ethanol lobby, shameless rent-seekers that they are, denounced the AP’s study as obviously biased hogwash, and demanded that the U.S. Environmental Protection ignore the abundant evidence against ethanol’s supposed environmental benefits by upholding the ever-increasing volumetric blending requirements of the RFS.

If Big Ethanol didn’t like what the AP reported last fall, however, I think they’re likely to have an even bigger tantrum over what the AP is reporting on today — this time, a study funded by the feds that undercuts ethanol’s counterfeit environmentalism even further:

Biofuels made from the leftovers of harvested corn plants are worse than gasoline for global warming in the short term, a study shows, challenging the Obama administration’s conclusions that they are a much cleaner oil alternative and will help combat climate change.

A $500,000 study paid for by the federal government and released Sunday in the peer-reviewed journal Nature Climate Change concludes that biofuels made with corn residue release 7 percent more greenhouse gases in the early years compared with conventional gasoline.

While biofuels are better in the long run, the study says they won’t meet a standard set in a 2007 energy law to qualify as renewable fuel.

The conclusions deal a blow to what are known as cellulosic biofuels, which have received more than a billion dollars in federal support but have struggled to meet volume targets mandated by law. About half of the initial market in cellulosics is expected to be derived from corn residue.

And seeing as how these “advanced” cellulosic biofuels derived from biomass other than corn starch (i.e., in this case, the stalks, cobs, leaves) are technically supposed to release 50 to 60 percent fewer carbon emissions on net evaluation than gasoline, that’s something of a problem. I might also add that “a billion dollars in federal support” is a vast understatement, what with that whole Renewable Fuel Standard injecting a bunch of fake signals into the market by forcing Americans to purchase a product that they obviously wouldn’t without the presence of a federal mandate (despite the repeated failure of the well-subsidized biofuels market to actually provide the requisite amount of biofuels in commercially available quantities, yeesh).

Tags: biofuels, cellulosic biofuels, Environmental Protection Agency, ethanol, gas, Renewable Fuel Standard, renewables

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Biofuelsproducers:Noreally,thisistheyear

Biofuels producers: No really, this is the year biofuels are going to take off, for serious

posted at 6:01 pm on April 16, 2014 by Erika Johnsen

I mentioned the other day that, to the detriment of just about everyone involved, the Environmental Protection Agency is still considering whether or not they really will follow through with their proposal to reduce the gasoline-ethanol blending volumes required by the Renewable Fuel Standard, first enacted by 2007, to avoid running the oil industry up against the “blend wall” (the ten percent ethanol threshold beyond which a lot of cars and trucks on the road won’t be able to cope with the biofueled gas). Big Ethanol, of course, has been complaining that this is just a load of waffle invented by Big Oil to artificially stymie competition — but people in glass houses really shouldn’t be in the business of throwing stones, you know? Via the NYT:

“It’s very frustrating,” said Christopher Standlee, executive vice president of Abengoa. “The whole purpose of the Renewable Fuel Standard was to encourage investment to create brand-new technologies that would help the United States become more energy-independent and use cleaner and more efficient fuels. We feel like we are just on the verge of doing that and now the E.P.A. is talking about changing the rules.” …

The energy act’s goal of reaching 21 billion gallons of advanced biofuels by 2022 is now considered virtually unreachable, even by biofuel enthusiasts. “It would take an enormous effort of deploying capital and labor and engineering,” said Paul Winters, a spokesman for the Biotechnology Industry Organization. …

But biofuel producers and lobbyists say the country needs more of their product. “Cellulosic biofuel has the promise to deliver tens of billions of gallons of ethanol to the United States, but there needs to be a market for that,” Brian Foody, president and chief executive of the Canadian biofuel company Iogen, told reporters in a recent conference call by industry executives discussing the impact of the E.P.A. proposal. “We believe it’s critical for E.P.A. to create a segment or space in the market for E-85 to grow and to set numbers that will provide incentives.”

“There needs to be a market for that.” Yes, and since there obviously isn’t one, you need the federal government to artificially keep the fake one that’s already in place going.

But, this time, these biofuels producers are promising, they’re seriously super-duper close to developing the next best thing since sliced bread. Take this brand-new cellulosic ethanol plant they’re currently heralding as the wondrous future of biofuels:

But Abengoa, which received a $134 million loan guarantee from the Energy Department, will be first out of the gate, its plant beginning full operations by early May. The company plans to produce 25 million gallons of biofuel a year at the plant here and has already started a 21-megawatt electricity plant at the site powered by biomass.

Abengoa has developed a proprietary enzyme to mix with corn stalks and wheat straw to produce sugars that will then be fermented and distilled to produce cellulosic ethanol. That more efficient process can increase yields and decrease costs. Over the last four years, Abengoa has improved yields from 55 gallons of ethanol per ton of biomass to 80 gallons per ton.

You know what? Maybe Abengoa really will be all that and a bag of chips. …Or, maybe not, and it still won’t do nearly enough to make its product as attractive on its own competitive merits as other fuel sources. The point is, haven’t we “invested” quite enough taxpayer money and economic opportunity costs supporting costly and failed endeavors trying to find out?

Tags: biofuels, ethanol, investment, lobbyists, Renewable Fuel Standard

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GAOtoEPA:You’regoingtohaveto

GAO to EPA: You’re going to have to release these Renewable Fuel Standard regulations sometime, you know

posted at 8:51 pm on April 14, 2014 by Erika Johnsen

Big Ethanol was appalled when the Environmental Protection Agency announced late last year that they might actually acknowledge reality by reducing the required volume of certain biofuels that refiners have to blend into the nation’s fuel supply under the Renewable Fuel Standard. Our economic slowdown combined with technological innovation and increased fuel efficiency have resulted in declining gasoline consumption in the past few years, and the annually increased volume of biofuels refiners are automatically supposed to be incorporating was running the fuel supply up against phenomenon known as the “blend wall,” the point at which the mixed fuel is no longer safe for use in most cars and trucks on the road. This phenomenon has never troubled Big Ethanol, an industry rather partial to the artificially jacked-up demand for their product the federal government mandates into existence, and the industry’s powerful lobby went into an almighty uproar over the proposed change that they’re still battling out.

Whatever decision the EPA goes with, they kinda’ need to get around to making it, since the not-yet-released 2014 standard will be applied retroactively — and as the Government Accountability Office notes in a new report, that is currently inflicting quite a bit of uncertainty on our energy sector. Via The Hill:

The Government Accountability Office report released on Monday looked at three major changes that have affected the domestic petroleum, or gasoline, refining industry, a key one being the EPA’s renewable fuel mandate. …

Since 2009 the EPA has missed its deadline to issue regulations for the renewable fuel mandate, the report states. This year has been no exception. However, the EPA did retreat on the amount of ethanol it is requiring refiners to mix into the fuel supply for the first time since the standards were established in 2007. …

“A late [Renewable Fuel Standard] contributes to industry uncertainty, which can increase costs because industry cannot plan and budget effectively, according to some stakeholders,” the watchdog said. …

The GAO notes that future consumption of petroleum products may increase through 2020 but will not return to past levels. If EPA continues to issue the fuel standards late costs may be incurred by refiners or passed onto consumer through higher gasoline prices.

Oh, look: The EPA inflicting uncertainty and extra costs onto pretty much everything it touches. Something new and different for them.

Tags: biofuels, ethanol, gas prices, Renewable Fuel Standard

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UNclimatepanel:Bytheway,weshould

UN climate panel: By the way, we should probably cool it with the biofuels

posted at 5:21 pm on April 3, 2014 by Erika Johnsen

That corn ethanol isn’t even remotely “green” is one of the biofuel industry’s worst-kept secrets. Back in 2010, super-duper courageous climate crusader Al Gore himself admitted that “first-generation ethanol, I think, was a mistake. The energy conversion ratios are at best very small… One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.” There has since been plenty of even mainstream-media ink spilled on the many ways in which ethanol subsidies incentivize farms to bring marginal lands into production, destroying potential conservation areas and increasing fertilizer and water use as a result.

Not that any of those inconvenient truths have deterred lawmakers from districts with agricultural interests from falling all over themselves to protect the several types of generous subsidization coveted by Big Ethanol, nor swayed the sixty-two other countries around the world that have their own forms of biofuels mandates; but even the big-government bureaucrats and climate scientists at the United Nations aren’t bothering to act too excited about biofuels anymore, as they noted in their latest paroxysm of an IPCC report. The Scientific American summarizes:

The U.N. Intergovernmental Panel on Climate Change has for the first time acknowledged the risks of uncontrolled biofuels development, a skepticism that has slowly emerged into the mainstream scientific community, say academics.

IPCC’s Working Group II report, released this morning in Yokohama, Japan, indicates that the U.N. scientific body on climate change has loosened its 2007 position that defines biofuels as a mitigation strategy for reducing greenhouse gas emissions.

The report affirms that the science that has raised questions around the sustainability of biofuels in the last six years, said Jeremy Martin, a senior scientist in the Union of Concerned Scientists’ Clean Vehicles program.

“I think that’s switched from being something novel and controversial to something that is common sense,” he said.

The IPCC notes that they still see some potential role for biofuels as part of the global energy mix, but they are at least starting to get a little more forthright about their environmental risks and tradeoffs.

And speaking of farm-state politicians falling all over themselves to protect Big Ethanol’s interests… via the Des Moines Register:

A bill aiding Iowa’s biofuels industry was approved 48-0 Tuesday by the Iowa Senate.

Senate File 2344, which was sent to the House, will increase the tax credit for E15 blended gasoline during the summer months, extend the biodiesel production tax credit for five years to retain and attract biodiesel production to Iowa, and add biobutanol – an advanced biofuel – to the state’s renewable fuels industry, said Sen. Robert Hogg, D-Cedar Rapids, the bill’s floor manager.

In addition, an amendment to the bill extends tax credits to retailers that sell biodiesel, E15 and E85 motor fuels for an additional two years, from 2017 to 2019. …

“This vote sends a clear message that Iowans are serious about increasing renewable fuels production and use, expanding consumer fuel choice and growing Iowa’s economy,” said Grant Menke, policy director of the Iowa Renewable Fuels Association.

Huh. “Expanding consumer fuel choice and growing Iowa’s economy” is certainly an interesting euphemism for “artificially directing taxpayer money and private-sector resources toward a politically favored industry at the expense of more productive uses.” I find this kind of Central-Planning-Lite woefully inadvisable on any level, but that’s federalism, I suppose — the only problem is that these state subsidies are merely feeding off of the larger federal subsidies that artificially manipulate national demand in the biofuel industry’s favor.

Tags: agriculture, biofuels, climate change, ethanol, Iowa, United Nations, water

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Allegedlyimaginaryethanol“blendwall”mysteriouslycostrefiners

Allegedly imaginary ethanol “blend wall” mysteriously cost refiners at least $1.3 billion in 2013

posted at 2:51 pm on April 1, 2014 by Erika Johnsen

When Congress first enacted and then expanded the inglorious ethanol subsidy that is the Renewable Fuel Standard back in 2007, lawmakers devised the rule — requiring that refiners blend certain volumes of biofuels into the country’s fuel supply or else buy credits for an exemption — based on the crucial assumption that the nation’s demand for gasoline would continue to decrease indefinitely as our economy grew. Therefore, they reasoned, the fuel supply would be able to absorb an annually increasing amount of ethanol — but because of increased fuel efficiency and slackened economic growth, that hasn’t been the case at all. For awhile now, refiners have been expressing concern over being forced to run the country’s gasoline up against the “blend wall,” i.e., the point at which the ethanol-gasoline blends are no longer safe for use in most cars and trucks.

Pish tosh!, cried the ethanol lobby, which (as you might imagine) is rather partial to the Standard and the many ways in which it has artificially jacked up the country’s demand for corn and other biofuel resources. When the Environmental Protection Agency announced late last year that it intended to revise the required volumes of biofuels in a downward direction, ethanol producers across the country immediately went into a tailspin of furious denunciations against the oh-so-rent-seeking oil industry’s supposedly illegitimate complaints about ethanol-to-oil ratios, or whatever made-up nonsense about which those greedy oil execs were raving. Even if that were as big a problem as the oil industry was making it out to be, Big Ethanol insisted about Big Oil’s motives, Big Oil is super-duper rich, and can totally handle the extra pressure without passing costs onto consumers.

Or something.

Last year’s spike in the price of ethanol blending credits cost independent refiners at least $1.35 billion, more than three times as much as the year before, according to a Reuters’ review of securities filings.

The tally, which has not been previously reported, is a conservative estimate as it includes only nine refiners that disclosed the figures. Others affected did not specify the cost of buying Renewable Identification Number (RINs), paper credits used to meet quotas for blending biofuel into gasoline and diesel. …

The review also highlights how the impact was unevenly distributed, with independent refiners CVR Refining and LyondellBasell alone shouldering more than a fifth of the cost although they only account for 2.5 percent of the nation’s daily refining capacity. …

Valero Energy Corp, the biggest U.S. refiner with 10 percent of capacity, spent about $517 million on RINs in 2013.

“We were clear that Valero could not bear that cost alone, so much or all was passed on to consumers,” said Valero spokesman Bill Day. The company estimates that it will spend another $250 million to $350 million on RINs in 2014.

Ugh. The EPA has yet to make a final decision on the RFS’s requirements for 2014 (although, yes — they will be applied retroactively), and you can count on Big Ethanol continuing to fight the potential downshift every step of the way. The fact that the Renewable Fuel Standard’s supposed “green” credentials have long since been disproved is of little consequence to them.

Tags: agriculture, biofuels, ethanol, fossil fuels, gas prices, Renewable Fuel Standard, subsidies

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BiofuelproducerssnugglinguptoCongresstobeg

Biofuel producers snuggling up to Congress to beg for their subsides back

posted at 8:41 pm on March 25, 2014 by Erika Johnsen

Much like their fellow “green”-energy lobbyists in the wind industry struggling beneath the oh-so-crushing burden of not yet having their egregiously generous production and investment tax credits restored after their expiration at the end of 2013, biofuels enthusiasts are again ramping up their own calls for their restoration of their particular pork-tastic tax credits. Via The Hill:

A coalition of biofuel advocacy organizations sent a letter Monday to the top tax lawmakers in the Senate urging them to renew expired tax credits that helped their industry.

The credits, which incentivized advanced biofuel production and infrastructure, expired Dec. 31, along with a slew of popular tax breaks.

“Advanced biofuel tax credits have allowed the biofuels industry to make great strides in reducing the cost of production and developing first-of-kind technologies to deploy the most innovative fuel in the world,” the groups said in their letter to Senate Finance Committee Chairman Sen. Ron Wyden (D-Ore.) and Ranking Member Orrin Hatch (R-Utah). …

Representatives of the Advanced Ethanol Council, the Advanced Biofuels Association, the Algae Biomass Organization, the Biotechnology Industry Organization, Growth Energy, the National Biodiesel Board and the Renewable Fuels Association signed the letter.

Yep. There is an Algae Biomass Organization, and it too wants its specially interested due.

This group’s particular plea mostly applies to what are known as advanced or second-generation biofuels from various types of biomass from which it’s difficult to extract fuel (hence the explicit subsidy-mongering), and in the meantime, we’re still waiting for the Environmental Protection Agency to decide if they want to move forward on a reduction to the mother of all biofuels subsidies, the Renewable Fuel Standard. When the EPA announced late last year that they finally planned to acknowledge that the RFS’s mandate requiring an annually-increasing amount of ethanol to be blended into the nation’s gasoline supply could not coexist with the reality of declining free-market demand for gasoline, the old-fashioned corn-based biofuels lobby went into an almighty uproar, and they’ve been lobbying Congress and the administration on the regular to get them to keep plowing forward with the unworkable mandate to protect their overgrown industry. The EPA is supposed to finalize the standard for the coming year every November 30th, but we’re still waiting on the 2014 version because of the accompanying political difficulties (and yes, the standard will be enforced retroactively). Maybe sometime this year they’ll actually get around to telling us.

Tags: biofuels, Congress, energy, ethanol, lobbyists, special interests, subsidies

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ThisiswhyBigEthanolwillfightto

This is why Big Ethanol will fight to the death to fully preserve the Renewable Fuel Standard

posted at 4:41 pm on February 11, 2014 by Erika Johnsen

In a word: Monies. …Major. Cash. Monies.

Federal forecasters expect U.S. farm income to decline 26.6% to $95.8 billion this year, the lowest level since 2010, due to a sharp drop in corn and soybean prices.

The Department of Agriculture projected that U.S. net farm income would decrease due to an almost $11-billion decline in corn receipts and a decline of more than $6 billion in soybean receipts. Corn and soybean prices fell last year as U.S. growers harvested large crops, including the biggest U.S. corn crop in history.

Farm income last year was $130.5 billion, a nominal all-time high.

Farm incomes roughly doubled from 2006 through 2011 as rising global demand for grains and increased federal mandates for corn-based ethanol production drove prices higher.

To review: Via the Renewable Fuel Standard, the federal government incentivizes agribusiness to grow waaay more corn than America actually wants or needs by mandating that oil refiners blend a certain and annually increasing volume of biofuels into the nation’s gasoline and diesel supply (and I might add that agribusiness accomplishes this rent-sought feat by bringing more and marginal lands into production, helping to obliterate what we were once told were the manifold environmental benefits of corn-based ethanol).

So we end up with more corn than we even know what to do with, but when prices subsequently drop — which, in a sane and market-driven world, would be an excellent signal to stop growing so much corn –  agribusiness need not fear because government crop insurance is there to shield them from prices that are “too low.” Why the agriculture sector is especially deserving of so much federal cushioning, I will never understand — and in fact, they’re probably less so than other industries, as President Obama openly acknowledged in his own FY 2014 budget proposal, via the Washington Post:

“The farm sector continues to be one of the strongest sectors of the U.S. economy, with net farm income expected to increase 13.6 percent to $128.2 billion in 2013, which would be the highest inflation-adjusted amount since 1973,” it pointed out. “With the value of both crop and livestock production at all-time highs, income support payments based upon historical levels of production can no longer be justified.” …

The bill expands crop insurance subsidies, which the president had targeted for reduction because of their wasteful, distorting impact on both the federal budget and farmers’ use of land, labor and capital. … Worst of all, it creates two new programs — Agriculture Risk Coverage and a Supplemental Coverage Option — which, taken together, all but guarantee beneficiaries’ revenues never fall below 86 percent of their earnings during years of high crop prices, according to estimates by Montana agricultural economist Vincent H. Smith. This federal largess is subject to no significant means-testing. In fact, people making up to $900,000 in adjusted gross annual income can qualify for payments. Why would a president concerned about inequality endorse such welfare for the prosperous?

But I digress, and anyhow, the agriculture lobby already won the crop-insurance fight for at least the next five years when President Obama signed the latest appalling rendition of the farm bill into law last week. (Ugh.) Back to the Renewable Fuel Standard: Big Ethanol really doesn’t want the artificially bloated demand for corn to be erased with a decrease in RFS requirements, because why should anyone have to back out of what has otherwise become an amply profitable industry when the federal government is there for the lobbying?

That’s why the EPA’s proposal to even just slightly back away from the requirements was such an unwelcome development for Big Ethanol, and why they’re doing everything in their power to try and — ahem — persuade the EPA to reevaluate that decision. The comment period on the rule change ended on the last Tuesday in January, so we should be finding out more soon.

Tags: agriculture, biofuels, epa, ethanol, farm subsidies, lobbyists, Renewable Fuel Standard

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Midwesterngovernors:Heynow,theRenewableFuelStandard

Midwestern governors: Hey now, the Renewable Fuel Standard is totally legit

posted at 1:01 pm on December 31, 2013 by Erika Johnsen

No. No, it’s not.

In a joint letter to the president, Environmental Protection Agency Administrator Gina McCarthy and Agriculture Secretary Tom Vilsack, Iowa Gov. Terry Branstad, Kansas Gov. Sam Brownback, Minnesota Gov. Mark Dayton, Nebraska Gov. Dave Heineman, North Dakota Gov. Jack Dalrymple and South Dakota Gov. Dennis Daugaard argue in defense of the ethanol standard. The letter stresses the importance of ethanol as it diversifies America’s energy portfolio, gives consumers choices at the pump, supports economic development in rural communities and reduces harmful emissions across the nation.

Providing evidence of their claims, the governors point to an Iowa State University estimate that says “corn prices alone could drop 19 cents per bushel based on the proposed rule, which could bring corn prices below the cost of production for many farmers. The proposed EPA rule could also cause a ripple effect on agribusiness, our communities, and the entire economy.” …

“Specifically, we hope that you will encourage the EPA to increase the biodiesel volume to reflect current production levels, modify the cellulosic target to match production expectations, and reinstate the statutory conventional renewable fuel target since there is clearly no domestic supply shortage.” …

Yes, by all means, please do try to delude us all further about how the Renewable Fuel Standard somehow isn’t merely a shameless piece of corporate pork for the agribusiness lobby that mandates that energy companies integrate a politically-determined volume of ethanol into the fuel supply and hence forces consumers to purchase a product for which there would clearly be no free-market demand otherwise. Please continue to dismiss the fact that the RFS is actually a net detriment to the environment and that it negatively impacts the prices of food and gasoline, and subsequently that the EPA actually shouldn’t acknowledge this reality by finally relenting on the increased-volume requirements that would force refiners to blend a higher amount of ethanol into our gasoline than is safe for use in cars and trucks. Really, don’t let the obviousness of there being “no domestic supply shortage,” since the federal government is deliberately instigating an artificial incentive for more supply, stop you.

Five out of six of those aforementioned governors are Republicans, by the way. The ability to deride subsidies and federal intervention in the free market all day long, but then miraculously come up with reasons why just a few certain subsidies really are beneficial and worthwhile, is truly quite amazing.

Tags: biofuels, ethanol, Renewable Fuel Standard, Republicans, special interests, subsidies

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Source from: hotair

Yetanotherreasontogetridofthe

Yet another reason to get rid of the Renewable Fuel Standard: So much fraud.

posted at 1:01 pm on December 20, 2013 by Erika Johnsen

There are any number of reasons that Congress should finally kill the Renewable Fuel Standard, that plague of what was once farcically branded as an “green” mandate that requires refiners to blend an ever-increasing volume of certain politically-determined biofuels into the fuel supply or else purchase special credits to exempt themselves from having to do so. Among them: It incidentally highjacks food and gasoline prices, sending them ever higher; it incentivizes farmers to bring marginal lands into production and is actually counterproductive to environmentalist goals on net evaluation; and, oh yeah, its very existence in the form of a national mandate means that it is little more than corporate pork for agribusiness that injects artificial signals into the free market and is not a cost-effective or efficient mechanism with which consumers would willingly abide.

Back when Congress first enacted this hot mess of a horrible idea, they blithely assumed that Americans’ gasoline consumption would continue at an indefinitely upward clip, but now that a slowed economy and more fuel-efficient vehicles have more or less flat-lined that demand, that whole “ever-increasing biofuel volumes” part of the RFS equation is blowing up in the industry’s collective face.

Oh, and here comes still one more reason to kill the RFS, via Bloomberg:

The U.S. Environmental Protection Agency said it has invalidated 33.5 million renewable-fuel credits sold by an Indiana company for biofuel it didn’t produce, the fourth time the agency has alleged fraud in the program.

The filing today follows fraud charges filed against the former owners of the Indiana-based E-Biofuels LLC in September. The U.S. Justice Department accused them of falsely claiming its products qualified under government incentives for renewable fuels.

… Before today’s action, the agency had said three companies produced a total of 140 million fraudulent Renewable Identification Numbers, or RINs.

The basic credit for ethanol last sold for 28 cents. At today’s value of about 40 cents each for biodiesel, the RINs affected by EPA’s decision would be worth about $13.4 million.

[Sidebar: Remember that one time, last September, when the Paper of Record pretty much tried to blame Wall Street for -- horror of horrors -- speculating with RINs and "exploiting" the ethanol market? ...Hilarious. Just hilarious.]

Fortunately, bipartisan aversion to the mandate as it stands is catching on, much to Big Ethanol’s dismay. If even the EPA can kinda’-sorta’, not-quite-but-almost admit they were wrong on this one (they elected to decrease next year’s required biofuels volume last month), maybe Congress can get its act together, too.

Tags: biofuels, Environmental Protection Agency, environmentalism, ethanol

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Source from: hotair

BigEthanolsuddenlyprettyupsetabouttheEPA’s

Big Ethanol suddenly pretty upset about the EPA’s legal vagaries

posted at 4:01 pm on November 22, 2013 by Erika Johnsen

The Big Ethanol lobby has been having a rough go of it lately, what with the Associated Press publishing a big exposé over just how decidedly not-”green” corn-based ethanol really is, followed by the Environmental Protection Agency confirming the industry’s worst fears by announcing that a rumored reduction to the Renewable Fuel Standard would indeed go forward. The industry-wide freakout over the very possibility of an RFS reduction — which will now allow refiners to ease up a bit on the amount of so-called biofuel they’re required to blend into the country’s fuel supply, rather than charging forward with the regularly scheduled increase — aptly demonstrated just how deeply the change will affect the ethanol industry’s artificially bloated market share. Now that they’re in survival-mode, they’re turning to questioning the EPA’s legal authority to even make such a move in the first place. Via Ethanol Producer Magazine (h/t RealClearEnergy):

The Renewable Fuels Association held a media teleconference Nov. 21, to address the issue of whether the U.S. EPA has the statutory authority to lower the total renewable fuel standard (RFS) numbers, as reflected in the agency’s current proposed rule for the 2014 renewable volume obligations (RVO).

The RFA has made it clear it doesn’t believe the EPA can use the so-called blend wall as justification for a more than 3 billion gallon reduction in the overall required volumes of the RFS. The agency does have specific authority to reduce the volumes required for cellulosic ethanol, and has done that previously. However, RFA believes it has overstepped itself by proposing to reduce the total volume numbers. “We don’t believe that the agency can invent authority that it does not have by virtue of the statute,” said Bob Dinneen, president and CEO of the RFA, during the call. …

The RFA believes EPA is going beyond its authority by introducing the idea of a blend wall into a waiver provision that is focused on production and supply, not consumption. “That’s where we think that EPA has dramatically overstepped their bounds, overstepped the statute and is making a fundamental mistake,” he said

Funny — I don’t recall the ethanol lobby professing many scruples last year when the EPA was trying to prosecute oil companies for failing to comply with mandates about proper volumes of cellulosic ethanol — when the specific biofuels to which they were referring weren’t actually available in commercial quantities.

Anyhow. The EPA certainly does have a track record of, ahem, shall we say “stretching” the bounds of their authority, and the ethanol industry is pretty much correct in that it will be up to Congress to effectively undo the supply- and demand-distorting, economy-damaging influence of the RFS once and for all. While some Democrats may finally be cottoning on the fact that corn ethanol is certainly no boon for addressing climate change, lawmakers’ regional loyalties still tend to play the more powerful role in determining which way they’d vote — and you can bet that the ethanol lobby will be fighting that eventuality tooth and nail.

Tags: biofuels, Environmental Protection Agency, ethanol, green energy, lobbying

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Source from: hotair