GRAPEVINE, Texas, Feb. 24, 2015-The U.S. ethanol industry had a spectacular year in 2014. But unless Congress and the driving public recognize the tremendous potential of biofuels and reject Big Oil’s continuing attacks, the United States could lose its leadership position.
That was the double-edged message delivered by a score of speakers at the Renewable Fuels Association (RFA) National Ethanol Conference in Texas last week. Yes, ethanol has come a long way. But future success for biofuels, for combatting climate change, and for helping the U.S. economy soar depends on preserving the Renewable Fuel Standard (RFS) mandate and providing tax breaks for advanced biofuels to at least partially offset the permanent federal subsidies flowing to the oil industry.
On the plus side, RFA President and CEO Bob Dinneen explained that for 2014, the industry “experienced the single most profitable year in its history” – producing a record 14.3 billion gallons of ethanol, 39 million metric tons of animal feed, 16 billion pounds of CO2 gas, and 2.5 billion pounds of corn distillers’ oil used. “That’s a whopping $39.1 billion in output reverberating across the entire economy,” he said.
As a result, Dinneen added, the ethanol industry’s economic footprint included about 84,000 direct jobs, more than 295,000 indirect and induced jobs, a $53 billion contribution to gross domestic product, $27 billion in household income, and $10 billion in tax revenues.
Asserting that ethanol is an exceptional value-added industry, Dinneen pointed out that “In 2014, for every $1 spent on feedstock, the U.S. ethanol industry created $1.83 in clean energy and animal feed.” Many speakers added that the returns are poised to continue improving, thanks to the introduction of new technologies and new efficiencies in the biofuels supply chain.
Dinneen also argued that unlike the oil industry, biofuels create lasting value: “The oil industry trumpets the jobs created by the ‘energy renaissance’’’ in areas overlaying the Bakken formation in Montana and North Dakota. “But those jobs run dry as quickly as the wells being drilled. Look at what’s happening in towns all across the Bakken today. As the price of oil has fallen, rig numbers have fallen too. Jobs are lost. Communities are abandoned.”
Looking ahead, DuPont Industrial Biosciences President William Feehery told the conference that the grain ethanol industry’s rapid growth in size, sophistication and productivity set the stage for what he said was today’s about-to-soar advanced ethanol industry – and for DuPont’s 10-year path to opening its commercial-scale cellulosic ethanol plant in Nevada, Iowa, later this year. He charted corn ethanol’s rapid increase in gallons produced per unit of acreage, grain, enzymes, energy, water and financing. Then he promised that “Just as we saw in first-generation ethanol, the improvement cycle will be strong in advanced ethanol.
Feehery also predicted that as new processing technologies and new enzymes are developed, DuPont and other companies will expand the cellulosic ethanol market far beyond fuels to include products ranging from detergents and biochemicals to bioplastics.
“Today, the technology to unlock sugars in cellulose and the supply chains being developed to deliver those sugars at scale are enabling the commercial deployment of cellulosic ethanol,” Feehery said. However, he said that EPA’s continuing failure to announce long-overdue renewable fuel volume requirements for 2014 and 2015 has forced the private sector to shelve some plans for advanced biofuels.
Dinneen joined Feehery and other speakers in blasting EPA for its failure to keep the Renewable Fuel Standard (RFS) on track. But Dinneen also explained that “EPA’s job has been made exponentially more challenging by an incumbent (oil) industry that is intent upon undermining this (RFS) program at every turn to protect its market share, to protect its monopoly over the gas pump.”
In an Agri-Pulse interview, Dinneen pointed out that “the only liquid transportation fuel that receives any tax benefit right now is the oil industry, adding that the RFS “is simply a mechanism to force an industry that doesn’t want to provide consumer choice to offer the consumers some options at the pump.”
Noting that ethanol provides oil refiners with the lowest-cost octane enhancer, Dinneen said the RFS “is correcting a broken market, because refiners will walk away from favorable economics in the absence of this program. So I don’t think it does anything but force the market to work like a market should.”
Dinneen told the conference that the RFA is pursuing tax benefits for cellulosic biofuels. He said it is absurd that “the oil industry, that is well established, highly profitable, and the recipient of a century’s worth of largesse from the taxpayer, continues to be subsidized with permanently fixed tax breaks to the tune of at least $4 to $6 billion every year.
“Meanwhile, clean renewable fuels that are struggling to break into the market with new technologies that will provide immense benefit to the nation’s energy and economic future struggle to have a production tax incentive renewed every year. The annual drama keeps investors on edge and encourages even more money flowing to the incumbent (oil) industry.”
Addressing Washington, Dinneen said “For all those members of Congress that talk about an ‘all of the above’ energy strategy but only fight for that which is below the ground, I implore you, get your act together and pass meaningful tax reform that finally ends 100 years of oil subsidies and gives renewable energy resources some chance to succeed.”
Yet he also noted that despite the major oil companies and the American Petroleum Institute still fighting to repeal the RPS, “the oil companies themselves may not be monolithic on this any longer.” He sees some oil industry players such as Tesoro, Marathon and Valero recognizing that the RFS, biofuels, and low carbon fuel programs provide profit opportunities and are here to stay.
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