Oil industry vs renewable fuels battle takes to the air ˜ & gets political

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.



By Jonathan Harsch

 

WASHINGTON, Sept. 12, 2014-- The battle over renewable fuels has taken to the air.

The American Petroleum Institute (API) picked 9/11 to launch the first strike. On Thursday, API announced a TV, radio, print and online advertising campaign to deliver its charge that the federal Renewable Fuel Standard (RFS) has “raised prices on food and fuel.” The API ads urge consumers to “Tell President Obama to stop playing politics and fix the RFS.”

Within hours of the API's announcement, the renewables fuel industry unleashed an answering salvo and launched its own ad campaign. Fuels America representing both corn and cellulosic ethanol producers will air ads supporting the existing ethanol industry and explaining the importance of developing advanced biofuels such as cellulosic ethanol made from corn stalks and other crop residues.

Together we can feed the Bees"

Both the API attack and the Fuels America response are driven by the fact that the Obama administration still hasn't announced the RFS requirements for 2014. By law, the federal rule settling how many gallons of ethanol the petroleum industry is required to blend with gasoline for 2014 should have been announced last November. The delay has been painful for both the oil and ethanol industries, making planning difficult and attracting new investment virtually impossible.

The U.S. EPA which is responsible for setting RFS requirements proposed earlier this year that it would reduce ethanol levels in response to reduced consumer demand for gasoline. That prompted oil industry hope and ethanol industry fears. Now the latest indications from EPA point to 2014 ethanol levels which will be below what Congress has called for but at least somewhat higher than the EPA initially proposed for this year.

Explaining the oil industry position Thursday morning, API's Downstream Group Director Bob Greco said “Right now, EPA should be proposing the 2015 requirements, not waiting to finalize the requirements for 2014.” Calling the RFS “a regulatory disaster” which drives up fuel costs and harms the U.S. economy, Greco charged that in favoring ethanol, “EPA has shown more concern regarding mandating a market for fuels for which there is no demand, than it has for protecting the fuels for which actual consumers have shown a substantial demand.”

Greco said “studies show that higher ethanol mandates could cause severe fuel rationing, substantially raise fuel costs, and deal a blow to our economy.” He went so far as to charge that the administration has a political motive for favoring ethanol, pointing to Iowa's Senate race “and the White House's fear they will lose control of the Senate.” In that open-seat race, current U.S. House member Bruce Braley charges that his GOP opponent ‎Joni Ernst has favored the oil industry rather than renewable fuels. Braley has called on the administration “to reject any rule that cuts biofuels, recognizing this would be detrimental to our nation's energy supply and consumer choice at the pump.”

Greco insists that “The administration must protect consumers and set the 2014 ethanol mandate low enough to allow for non-ethanol gasoline for consumers who want it. The consumers' interest should come ahead of the ethanol producers.”

To press its arguments, Greco said API is “taking our concerns to the White House by requesting meetings with OMB officials” and launching its ad campaign “asking President Obama not to let partisan politics get ahead of sound fuels policy.”

POET Vice President Steve Hartig, now General Manager at POET-DSM Advanced Biofuels which has begun cellulosic ethanol production, responded with his own charges Thursday: “The administration's proposal to change the methodology and lower the targets of the Renewable Fuels Standard (RFS) has frozen investment in cellulosic ethanol and put our energy security and rural economies at risk.”

Hartig said POET and three other major players are on the verge of taking cellulosic ethanol production to commercial scale. But he said that since the EPA first proposed reducing the RFS ethanol mandate, “not one of the four companies has announced plans to build or license technology for a cellulosic plant in the United States.” He said that lowering the RFS requirements will mean that “the renewable fuels industry won't be allowed to grow beyond 10 percent of the market which is basically the volume available today in grain-based ethanol.”

Hartig warned that if the market for ethanol shrinks or even just remains flat, “then that is not an attractive market for investments. When you tell us that our fate will be controlled by our competitors in the oil industry, rather than by consumers in the marketplace, that is very discouraging to U.S. investors.” He predicted that allowing the RFS to be lowered “would drive cellulosic overseas to Asia, Europe and South America.” He called on the administration to recognize that “The future of America's environment and energy independence depends on our ability to stand up to the oil interests that want to keep us hooked on more expensive, more polluting foreign fossil fuels.”

That's the message which the renewables industry will deliver in full-page ads running in USA Today this weekend. 

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