Tuesday, November 19, 2013

Just in

Farmers disappointed with EPA’s plans to scale back RFS

Washington—EPA’s proposal to reduce the amount of ethanol that must be blended into the nation’s gasoline supply is a disappointment and strikes a blow to conventional ethanol production, as well as dampens the prospects for advanced biofuels, according to American Farm Bureau Federation President Bob Stallman. 

“The intent of the Renewable Fuels Standard revised in 2007 (RFS2) was to get more renewable fuels into our nation’s pipeline and move beyond the E10 fuel blend. The announcement from EPA moves us in the opposite direction. This decision has the potential to pull the plug on new technologies and investments that are currently in place and needed to produce advanced biofuels,” Stallman said. 

The RFS requires transportation fuels in the U.S. to contain a certain amount of renewable fuels, such as ethanol or biodiesel. Those renewable fuels minimums, based on expected overall fuel consumption, are set to increase every year to achieve 36 billion gallons of renewable fuel by 2022. 

This year, however, Americans are expected to use about 10 billion gallons less of gasoline than they did in 2007, when the RFS2 law was passed. The drop since 2007 has been a result of the recession of 2008-2009 and the efficiencies of the Corporate Average Fuel Economy standards, known as CAFÉ standards, which have resulted in more fuel efficient vehicles on the road.

The RFS2 target initially set for 2014 was 18.5 billion gallons, up from 16.55 billion gallons this year.  EPA is proposing reducing that target to 15.2 billion gallons of renewable fuels, a move large oil companies strongly support. 

Bumping up against what they call a “blend wall,” gas manufacturers say the law hurts the economy by increasing production costs and pushing prices up at the pump.  The blend wall refers to efforts to meet yearly RFS mandates.  Currently, most refiners are using a 90-percent-petroleum to 10-percent-ethanol blend (E10), but to meet the RFS’ increasing renewable fuels minimums, they’ll have to decrease the amount of gas and bump up the amount of ethanol in the fuel they’re producing.  According to Andrew Walmsley, AFBF energy specialist, this is a surprise to no one. 

“It was clear from the day the RFS2 was enacted that refiners would have to eventually up the amount of ethanol blended into gasoline,” Walmsley said.  “It happened sooner than expected, but the point is, it was expected.”

The ones who are caught off guard here, says Walmsley, are the farmers who grow the corn and other biofuels inputs, biofuels plants and their investors and the rural economies they all support. 

“Rural America is counting on the stability and certainty of the RFS2 law, which continues to decrease our dependence on foreign crude oil, create jobs and revitalize rural communities, exactly as it was intended to,” he said. 

The agency’s proposal will be open to 60 days of public comment before EPA makes a final decision, which is expected this spring. 

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