July 31, 2012
Corn ethanol industry slams livestock petition to waive mandate
Published in E & E
The ethanol industry is accusing the livestock industry of spreading misinformation after a coalition of swine, beef, poultry and chicken groups yesterday petitioned U.S. EPA to waive the federal biofuels mandate.
Livestock groups, said Growth Energy CEO Tom Buis, are "playing on people's fears during a time of economic difficulty." The petition from livestock groups requests that EPA Administrator Lisa Jackson waive the mandate for up to a year to help ranchers cope with the drought.
"We have never run out of corn, and this year will be no different," Buis said. "While there is no doubt this year's crop yield will be reduced, it is premature and irresponsible to blame ethanol for a lack of rain."
The petition filed yesterday and the reaction from ethanol groups are the latest in a series of escalating attacks and counterattacks over the federal renewable fuel standard, which this year mandates that refiners blend 13.2 million gallons of corn ethanol into the fuel supply.
In releasing their petition yesterday, the livestock groups allege that they have experienced severe economic harm from soaring corn prices caused by the mandate (Greenwire, July 30).
Growth Energy and other biofuels organizations responded swiftly to the petition, questioning its premise and whether the livestock groups even have standing to file a waiver in the first place.
"While we understand the meat industry feels entitled to cheap corn, it is unclear their petition to waive the RFS is even permissible," said Brian Jennings, executive vice president of the South Dakota-based American Coalition for Ethanol.
The Clean Air Act allows only states and obligated parties -- the refiners required to blend ethanol into fuel, for example -- to petition to waive the standard. Buis said that "any rationale" to show that the coalition has standing "is suspiciously absent from the letter" to Jackson.
Michael Formica, environmental counsel at the National Pork Producers Council, yesterday defended the petition, saying the groups' authority comes from the Administrative Procedures Act. He said that the petition will force the EPA administrator to do the same analysis she would have to do if the petition were filed by an obligated party.
Regardless of standing, the ethanol industry said yesterday that it believes the facts are on its side. The industry has blamed high corn prices on the drought, oil prices and speculation.
"Waiving the RFS won't bring the type of relief the livestock groups are seeking, nor will it result in significantly lower feed prices," said Renewable Fuels Association President and CEO Bob Dinneen.
At the heart of the debate is disagreement over how easy it will be for obligated parties to meet the renewable fuel standard this year and how much of an impact waiving the standard would have.
The ethanol industry points to between 2.4 billion and 2.6 billion banked renewable fuel credits in the market that are currently available to help meet the standard, regardless of this year's corn crop. This flexibility in the program provided by the credits means that waiving the standard won't have a big impact on corn prices, according to a study released last week by Iowa State University professor Bruce Babcock (Greenwire, July 26).
But the livestock industries cite a very different Babcock study in their petition that found the standard could add $2.13 and $2.37 to corn bushel prices in 2015 and 2020, respectively. The study was done and paid for by the National Pork Producers Council and did not take into account carry-over credits.
Both the livestock and corn ethanol industries will have a better idea of how much corn is available for both feed and fuel on Aug. 10, when the Department of Agriculture is set to release its next projection of the annual corn yield. That projection will be the first to take into account actual yields that have been diminished by the drought.