WBIA BLOG

Producers rail against changes to ethanol requirements

Many are frustrated Walker hasn’t weighed in on issue

By Rick Barrett of the Journal Sentinel
Jan. 15, 2014

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Wisconsin biofuel producers say they’re disappointed Gov. Scott Walker hasn’t joined a group of Midwestern governors urging the federal government to support ethanol use and not cut the fuel additive requirement in gasoline.

Long considered a boon to the Midwest economy, ethanol made from corn is blended in most of the gasoline sold in the U.S. today.

But for the first time since 2007, the U.S. Environmental Protection Agency has proposed cutting by 3 billion gallons, or almost 18%, the amount of ethanol in the U.S. fuel supply this year.

The reduction could have a huge adverse effect on corn growers and ethanol plants, said Robert Sather, co-founder of Ace Ethanol in Stanley and president of the Wisconsin Bio Industry Alliance.

“We have nine ethanol plants in the state. They will all be in jeopardy if the EPA change comes to fruition,” Sather said.

The proposal has raised the ire of Iowa Gov. Terry Branstad, a Republican, and governors from Illinois, Kansas, Michigan, Minnesota, Nebraska, North Dakota and South Dakota, who want the EPA to leave the biofuel requirements intact.

If the EPA’s proposed rule takes effect, the negative impact would be felt most in rural America, the governors said in a letter to EPA Administrator Gina McCarthy and Agriculture Secretary Tom Vilsack.

The governors said more than 400,000 Americans depend on renewable fuels for jobs in their states, directly or indirectly. They cited an Iowa State University study that estimated a reduction in the Renewable Fuels Standard could cause corn prices to drop below the point where farmers would make a profit on the commodity.

Corn is Wisconsin’s biggest crop, and farmers make planting decisions based in part on the demand for ethanol. So Wisconsin ethanol producers say they’re frustrated by Walker’s decision not join the other governors in urging the EPA to reject any reduction in the Renewable Fuels Standard.

Walker says he’s keeping a campaign pledge to not take a position in the debate that has pitted ethanol producers against Wisconsin’s small-engine industry, which opposes increased use of the fuel additive.

Livestock farmers also aren’t pleased with ethanol because it drives up the price of corn and makes their feed more expensive.

“From our standpoint, it’s a careful balance. We’ve got corn producers, but we also have (corn) users, particularly in the dairy industry,” Walker said in an interview.

The EPA was supposed to make its decision on the 2014 ethanol requirements last November but missed the deadline and has kept its public comment period open until Jan. 28.

“If there ever was a time the industry wanted the governor to get involved and weigh in, now is that time,” said Josh Morby, executive director of the Wisconsin Bio Industry Alliance.

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In a speech to EPA officials in November, Iowa’s Branstad said by lowering the nation’s ethanol blending mandate, President Barack Obama’s administration would be turning its back on Iowa voters.

Iowa is the nation’s largest ethanol producer with 42 refineries.

“This is going to drive us into what could be another farm crisis. It makes no sense,” Branstad said.

Ethanol critics say the recent boom in domestic oil production has made the biofuel additive less important as an alternative to foreign oil.

Also, as vehicles become more fuel efficient, Americans are using less gasoline than they did seven years ago when the government set the Renewable Fuels Standard.

Almost all gasoline sold in the U.S. contains 10% ethanol.

“We are now at the E-10 blend wall,” the agency said, adding that if gasoline use continues to decline with more fuel-efficient vehicles, then growth in ethanol use would have to come from higher blends ranging from 15% to 85%.

That would be unpopular with the automotive industry and small-engine makers, who contend the higher blends could result in problems such as premature engine wear, fuel line issues and lower fuel mileage.

It’s time to scale back the Renewable Fuels Standard to better reflect the current situation, the American Petroleum Institute says.

“The Renewable Fuels Standard was a well-intentioned law that was written in 2007, when the assumptions of what 2014 would look like were vastly different,” said Patrick Kelly, API’s senior fuels policy adviser.

“Now the EPA has taken steps in the right direction to address this,” Kelly said.

 

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Wisconsin’s Bio Industry Needs Your Help Today

A new bill in Wisconsin that would have a huge impact on the bio economy in Wisconsin could be introduced as soon as this week, and would work to extend the following:

- A 45-cent-per-gallon Volumetric Ethanol Excise Tax Credit (VEETC)
- A 54-cent-per-gallon ethanol tariff
- A cellulosic ethanol tax credit
- A small producers tax credit

    We are asking everyone’s help by making a call to your Congressional Representative and sending a letter asking for their support of this important bill.  It is critical to gain their support now for a bill that will have such an impact on the bio industry in Wisconsin.

    Without extension, these tax credits will expire at the end of this year, causing an immediate spike in fuel costs.  Without the VEETC credit, for example, taxpayers will see an increase of $5.4 billion in taxes at the fuel pump, an oppressive amount in this difficult economy.

    A GAO study found that since 1968 the oil industry has received more than $150 million in tax breaks, subsidies and incentives.  Support for ethanol has amounted to less than a tenth of that total.  Why wouldn’t we spend just as much on a source of fuel that reduces our dependency on foreign oil and increases our nation’s energy security?

    Please contact your Congressional Representative in support of the bill today.

    You may download talking points, a fact sheet and a sample letter below.

    VEETC Key Findings from RFA

    White Paper Talking Points on VEETC

    Sample Letter on VTEEC

    In order to have the most beneficial contact with your Congressional representative, the following is a listing of where they currently stand on the issue:

    Congresswoman Baldwin – Possible Support

    Congressman Kagen- Undecided

    Congressman King – Undecided

    Congresswoman Moore – Undecided

    Congressman Obey – Undecided

    Congressman Petri – Undecided

    Congressman Ryan – Undecided

    Congressman Sensenbrenner – Opposed

    We greatly appreciate all of your support in this cause and your help in moving Wisconsin’s bio industry forward.

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    Domestic Biofuels Bill Protects Small Engine Manufacturers and Users

    Assembly Bill 408, the Domestic Biofuels Bill, is a step toward making Wisconsin a leader in the renewable fuels industry.  The bill will protect and create jobs and help Wisconsin become a clean, more environmentally friendly state.

    Some small engine manufacturers, however, have expressed concerns about the bill.  As a strong supporter of small engine manufacturers and users, the WBIA has worked to highlight how the proposed bill will actually protect jobs and benefit the small engine industry.

    Here are a few ways in which the bill will protect small engine manufacturers:

    1.  The bill guarantees the availability of ethanol-free gasoline.

    2.  The bill ensures small engine users will be able to buy gasoline with ethanol blends recommended by the manufacturer.

    3.  The bill protects small engine owners, should ethanol become to expensive or scarce.

    For more details, including text from the bill, download our fact sheet below.

    Small Engine fact sheet [PDF]

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    Bio Industry Basics #8: Midwest States Support Ethanol and Biodiesel

    The Midwest Legislative Conference of The Council of State Governments, a bipartisan association of state legislators from 11 Midwest states including Wisconsin, recently released a series of policy resolutions supporting ethanol and biodiesel. The resolutions called for:

    • Increased use of ethanol and biodiesel
    • Increased use of ethanol blender pumps
    • Sound scientific methods for calculating carbon emissions
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