Jim Lane
“Trump Reiterates Support for Ethanol, RFS” is
the major headline to come out of the National Ethanol Conference
in San Diego, which is the Renewable Fuels Association’s annual
conflab and as usual produced a flurry of studies, keynotes and
statements on the viability and importance of US ethanol to
everything from American jobs to advanced American manufacturing.
The Trump headline came out of a letter sent to the delegates to
the event by President Trump — which itself is a hopeful sign of
support.
But did the President really offer support for the Renewable Fuel
Standard? Let’s look at the letter behind the headlines.
“Rest assured that your president
and this administration values the importance of renewable fuels
to America’s economy and to our energy independence. As I
emphasized throughout my campaign, renewable fuels are essential
to America’s energy strategy,” Trump wrote.
“As important as ethanol and the
Renewable Fuel Standard are to rural economies, I also know that
your industry has suffered from overzealous, job-killing
regulation. I am committed to reducing the regulatory burden on
all businesses, and my team is looking forward to working with
the Renewable Fuels Association, and many others, to identify
and reform those regulations that impede growth, increase
consumer costs, and eliminate good-paying jobs without providing
sufficient environmental or public health benefit,” Trump added.
Hmm. There’s support for renewable fuels in there. President
Trump reiterates that “renewable fuels are essential to America’s
energy strategy,” but when it comes to the RFS itself, the
President notes the importance of the Renewable Fuel Standard to
rural communities — and then quickly pivots to a theme of
identifying and reforming “those regulations that impede growth,
increase consumer costs, and eliminate good-paying jobs without
providing sufficient environmental or public health benefit.”
Now, the President could have written a letter to the Affordable
Healthcare Society attending at the National Conference to Save
Obamacare with the following:
“As important as Obamacare is to
low-income people, I also know that your industry has suffered
from overzealous, job-killing regulation. I am committed to
reducing the regulatory burden on all businesses, and my team is
looking forward to working with the Affordable Healthcare
Society, and many others, to identify and reform those
regulations that impede growth, increase consumer costs, and
eliminate good-paying jobs without providing sufficient
environmental or public health benefit.”
It sounds very supportive, but it’s a long way from a pledge to
defend Obamacare. And we’ve changed nothing in the structure, just
the names.
Nevertheless, the Renewable Fuels Association was grateful.
“We thank President Trump for reaffirming his support for the
domestic biofuels industry and the RFS,” said RFA President and
CEO Bob Dinneen. “The RFS has cleaned the air, reduced our
dependence on foreign oil and boosted local economies. Donald
Trump understands all this. Consumers benefit from this national
policy and our industry looks forward to continuing to be the
lowest cost, highest octane fuel in the world.”
Here’s the letter, below.
$42B in market impact
The RFA debuted a new
study by ABF Economics. which found that the U.S. ethanol
industry added $42.1 billion to the nation’s gross domestic
product and supported nearly 340,000 jobs in 2016.
According to the analysis, the production and use of 15.25
billion gallons of ethanol last year also:
•contributed nearly $14.4 billion to
the U.S. economy from manufacturing;
•added more than $22.5 billion in
income for American households;
•generated an estimated $4.9 billion
in tax revenue to the Federal Treasury and $3.6 billion in revenue
to state and local governments;
•displaced 510 million barrels of
imported oil, keeping $20.1 billion in the U.S. economy;
Record sales for ethanol producers
In all, it’s been a strong year for ethanol. Dinneen said in his
keynote that 2016 was “a record year for production, a record year
for net exports, a record year for domestic demand, and a record
year for E15 sales and infrastructure build-out. It was, in short,
a pretty darn good year,” said Dinneen.
Overall, he noted that the industry produced a record 15.3
billion gallons of ethanol in 2016, while supporting 74,420 direct
jobs and 264,756 indirect and induced jobs across the country.
Dinneen also predicted that the Trump Administration would “stand
up for American trade, and fight back against any trade distorting
tariffs, such as those recently imposed by the Chinese on U.S.
ethanol and dried distillers grain exports.”
The 2017 US Ethanol Outlook
How much U.S. ethanol was produced last year? What were the top
U.S. ethanol export markets? What are ethanol’s environmental and
octane benefits? How many states offer E15 (15 percent ethanol)
blends and how many automakers warranty their vehicles for higher
ethanol blends? The answer to these questions and many more is
simple, says the RFA — it’s
in the 2017 Ethanol Industry Outlook, and that’s here.
Shifting the Point of Obligation
One of the issues in the mix for the ethanol industry right now
is a fight over “the point of obligation” in the Renewable Fuel
Standard. Right now, that’s oil refineries. Carl Icahn and others
have been urging the White House to shift the point of obligation
to retailers and fuel distributors— and a coalition of independent
oil marketers, convenience store chains, travel plazas and
truckstops, and ethanol producers has assembled to fight the
change.
NATSO, representing more than 1,500 travel plazas and truckstops
nationwide, opined: “changing the point of obligation would hinder
the program’s objective of displacing traditional fuel and
replacing it with renewable substitutes to promote stable supply
and prices, and inject such massive disruption and uncertainty
into fuels markets that retail fuel prices will inevitably
skyrocket and the incentive for fuel marketers to integrate
renewable fuels into their product lines will dissipate. This will
crush the very constituencies whose interests President Trump
promised protect in order to benefit a narrow segment of the
refining industry.”
Growth Energy delivered
an economic analysis commissioned from Edgeworth Economics
that identifies numerous problems associated with changing the
Renewable Fuel Standard (RFS) point of obligation. Growth Energy
strongly supports EPA’s proposed denial to move the point of
obligation.
“Changing the point of obligation would have a disastrous impact
on the industry, retailers, and consumers,” Growth Energy CEO
Emily Skor said.
Shifting the burden of proof on high-ethanol blends
Also appearing this week from the The Urban Air Initiative and
several partners were filed comments with the Environmental
Protection Agency (EPA) that disrupts the agency’s current
rationale for controlling ethanol blends under the Clean Air Act,
in response to the proposed Renewables Enhancement Growth Support
Rule (REGS Rule).
The proposed rule would codify EPA’s position that fuel blends
with more than 15% ethanol (E16-E83) may only be used in Flex Fuel
Vehicles (FFVs). UAI argues that the Clean Air Act does not forbid
the use of midlevel gasoline-ethanol blends in conventional
vehicles.
UAI points out that under the Clean Air Act, EPA bears the burden
of showing that ethanol contributes to harmful emissions before it
may limit the concentration of ethanol in fuel. The proposed rule
reverses this burden of proof and subverts the intent of Congress
by requiring fuel manufacturers to show that higher levels of
ethanol would not harm emissions control systems.
In its comments, UAI
takes on EPA’s longstanding assumption that the Clean Air
Act’s “substantially similar” (sub-sim) law allows the agency to
control the concentration of ethanol in gasoline. UAI argues that
EPA’s interpretation of the sub-sim law is inconsistent with the
clear language of the law and must change.
“We believe these comments can be potentially game changing in
the way the EPA regulates clean burning ethanol,” said UAI
President Dave Vander Griend.
Several other organizations joined UAI’s comments. They include
the Energy Future Coalition, Clean Fuels Development Coalition,
Glacial Lakes Energy, Siouxland Ethanol, ICM Inc., Nebraska
Ethanol Board, National Farmers Union, South Dakota Farmers Union,
Minnesota Farmers Union, Montana Farmers Union, North Dakota
Farmers Union, and Wisconsin Farmers Union.
The Bottom Line
One thing you’ll note in the ethanol industry’s line of
discussion — it remains the ethanol industry, only loosely allied
with the renewable fuels industry as a whole. Further, we see a
shift from RFA — and almost everyone else promoting renewable
fuels on Capitol Hill – from discussing the greenhouse gas
benefits of renewable fuels to the domestic jobs and energy
security that flows from US-based fuel production.
But, that said, times are good and we’ll see about 2018.
Focal point ahead? For RFA, the focus is clearly on E15. There’s
quite a bit of work to be done with engine manufacturers who might
incorporate E30 blends in a new generation of engines designed to
reach the 52MPG CAFE standards that are proposed for the 2020s and
2030s.
Those worthy goals are far more in the background as the ethanol
industry continues to focus on a E15 tolerance that would boost
the potential for ethanol blending well above 20 billion gallons.
Jim Lane is editor and publisher of Biofuels Digest where this
article
was originally published.
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