House panel hears more calls for RFS reform

By Bill Eby

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WASHINGTON, July 24, 2013 - A House Energy subcommittee heard more calls today for changes to the federal Renewable Fuels Standard (RFS), with one witness telling the panel, “If we can't fix it, it needs to be repealed.”

Lets Talk Food

William “Bill” Roenigk, a former senior vice president of the National Chicken Council, told the House Energy and Power Subcommittee that the RFS, as updated by the Energy Independence and Security Act of 2007, “is not just broad and complex, but (is) also a statute that has outlived its usefulness.”

Reonigk, testifying during the second of two days of hearings soliciting testimony from stakeholders ranging from biofuel producers, feedstock growers and end users, said the RFS pushed demand for ethanol skyward, rapidly increasing the price of corn and imposing high feed costs on the poultry industry.

He said that over the past seven years, poultry and egg producers have paid feed costs totaling some $50 billion more than what corn and soybean meal prices would have been at pre-2006 levels.

“It is an understatement to say, ‘It has been difficult to pass this increased cost on to the chicken buyers,' whether they are supermarkets, restaurants, further processors, or buyers overseas,” Roenigk told the panel. He said the increase in costs is primarily responsible for the recent troubles in the U.S. chicken industry. A dozen of the 40 vertically integrated companies that make up the bulk of the sector are either going out of business or being sold to foreign interests.

“The negative and, perhaps, unintended consequences of forcing a move too far and too fast with corn-based ethanol have become overly clear and overly painful,” he said. “It has also become overly clear and apparent that there is no workable or reasonable provision in the RFS to provide flexibility when the corn supply is severely inadequate to meet all needs.”

Roenigk told subcommittee Chairman Ed Whitfield, R-Ky., that if the RFS can't be fixed, “it needs to be repealed.”

However, Pam Johnson, president of the National Corn Growers Association, reminded subcommittee members that less than a dozen years ago, corn was $2 per bushel and rural America was in a financial crisis. At the same time, she said, livestock producers “benefited considerably from these significantly below market prices.”

The RFS, Johnson said, was one of the policy tools adopted by Congress to revitalize U.S. agriculture. Furthermore, it has become “a critical piece of our nation's energy policy,” creating jobs, lessening U.S. dependence on foreign oil and improving the environmental footprint of the nation's transportation fuels, she said.

Johnson also cited the RFS' role in “spurring innovation and helping drive the development of advanced and cellulosic biofuel facilities. In short, it is doing exactly what it was designed to do - spur the development of a significant alternative to petroleum that ignites economic development for those who produce these new fuels and for those who use it.”

The issue of ethanol's carbon footprint drew conflict when another witness, Scott Faber, vice president of governmental affairs for the Environmental Working Group (EWG), cited a 2010 EPA assessment and a 2011 National Research Council report suggesting ethanol's lifecycle carbon emissions ran higher than those emitted by gasoline, primarily due to corn production.

In questions from the chair, Whitfield indicated that he did not believe that the RFS was meeting two of the three goals it was drafted to achieve, including a reduction in greenhouse gas emissions (GHGs). He also said the recent discovery of new oil and natural gas deposits in the United States has negated the RFS goal of reducing U.S. imports of foreign oil.

But NCGA's Johnson disputed contentions that ethanol is not improving the carbon footprint of transportation fuels, asserting that advances in technology and “smarter farming” has reduced GHGs from the production of corn by 36 percent, despite the increased demand for corn-based ethanol.

She said the RFS was needed to continue the pursuit of fuel alternatives to the ultimately “finite” supply of fossil fuels. She said corn production over the past three decades has seen decreases in land use by 30 percent, soil erosion by 67 percent, irrigation by 53 percent and energy use by 43 percent.

EWG's Faber said the corn ethanol mandate should be phased out of the RFS, a move he said would reduce GHG emissions and “create a level playing field for livestock producers.” He said the RFS should focus on accelerating the development of advanced, non-food crop biofuels.

Whitfield offered no timeframe on any changes to the RFS, concluding the hearing by saying lawmakers would address purported inequities, but proceed “cautiously.”

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