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Sunday, 06 December 2015 22:53

Michigan corn growers disappointed with new ethanol limits

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Michigan corn growers are disappointed by a U.S. Environmental Protection Agency announcement on Nov. 30 that they say fails to require enough corn-based ethanol to be blended into the nation’s fuel supply.

The long-awaited and highly contentious EPA decision set new limits for the amount of biofuels mandated under the federal Renewable Fuel Standard, a law passed in 2005 that has needed revising in part because of decreasing gasoline demand.

The federal agency raised the levels of renewable fuels — to 18 billion gallons overall for 2016 — from what it had proposed in June, which is still less than what was planned for under the last standard. The original goal called for 36 billion gallons overall of renewable fuel by 2022.

For corn producers, the EPA lowered 2016 requirements for corn-based ethanol from 15 billion gallons to 14.5 billion gallons.

“Any reduction in the statutory amount is a roadblock to biofuels like ethanol,” said Jim Zook, executive director of the Michigan Corn Growers Association. “By failing to set (blend) levels at the statutory amount, it appears the myths being pushed by big oil still hold sway with the EPA.”

A contentious fight had emerged nationwide over the policy that critics say has led to unintended environmental consequences, even though one of its main goals is to reduce U.S. greenhouse gas emissions.

Indeed, some environmental groups called the latest EPA decision a “missed opportunity” because it doesn’t put a greater emphasis on cellulosic fuels like switchgrass and still overly relies on corn-based ethanol.

“For the first time, the Obama administration has lowered the corn ethanol mandate but it really doesn’t go far enough in restructuring the Renewable Fuel Standard so it can incentivize fuels other than corn ethanol,” Emily Cassidy, a research analyst with the Environmental Working Group, said in an interview with MiBiz. “We know corn ethanol is worse for the climate than gasoline.”

Amid the contention, millions of dollars had been spent on advertising campaigns by interest groups. Voters in some states are basing their support in the 2016 election on a candidate’s ethanol-mandate position. The fight has been especially strong in agriculture-heavy states in the Midwest.

Among lawmakers, opposition has spanned the political spectrum. The oil industry, too, is putting up a fight against an agricultural sector that is cutting into its market share.

In Michigan, corn growers had hoped the program wouldn’t be scaled back. According to a recent industry report, 22,000 Michigan jobs are tied to the ethanol industry.

“It’s sad that people are so against the policy. There is so much disinformation out there,” said Jeff Sandborn, a Portland-based farmer who grows corn, soybeans and wheat.

Sandborn, who was recently elected to the board of the National Corn Growers Association, often sells his corn to an ethanol plant about 10 miles from his farm.

He said the EPA decision “could have serious impacts across rural America. For corn farmers, the RFS has encouraged an industry that has created thousands of good jobs.”

Sandborn added that a reduced demand for corn based on a smaller amount of bushels needed to meet the mandate will lower the price for the commodity.

‘We’re not where we want to be’

Bruce Dale, a university distinguished professor of chemical engineering at Michigan State University, said simply put, the industry is likely to fall short of the original production capacity goals set forth in the original standard for 2022.

While corn-based ethanol production makes up a majority of the federal program, capacity from other forms of biodiesel and second-generation ethanol is still underdeveloped, he said.

“We’re part way there,” he said. “We’re not where we want to be.”

Dale, who’s an international expert on biofuel production, said ethanol from corn grain is already the “cheapest octane booster in the market.”

He’s concerned about the consequences a retreat from the billions of dollars in federal research and development as part of the RFS program could have.

“If the RFS is changed in such a way to undercut that industry — taking that capital and money spent and throwing it away — (it) will have bad repercussions,” he said. “If they don’t have some sort of reasonable program going forward with second-generation ethanol, our country probably won’t try this for another decade or two.”

Environmental impacts

Dale said of the widespread controversy surrounding the rule: “Some of it is genuine, some of it is manufactured.”

He agrees with Sandborn that much of it stems from the oil industry’s attempt to protect its market share. Undoubtedly, the RFS mandate has supported Michigan farmers via increased corn demand, he said.

But environmental advocates also point to the impacts that raising so much of the commodity is having on the environment and on greenhouse gas emissions.

National organizations, with the support of former Vice President Al Gore, ran television ads against the RFS in several states including Indiana and Ohio because of the policy’s environmental impacts.

Cassidy of the Environmental Working Group called the EPA announcement a “missed opportunity” because it still depends primarily on corn-based ethanol instead of other even cleaner fuels.

On cellulosic fuels, “we’re very, very far behind,” she said. “The amount of cellulosic fuels produced now is just a trickle of what we thought we’d get. Moving forward, it’s time that Congress steps in and really looks at the RFS and tries to figure out how to stop flooding the market with corn ethanol and incentivizing lower-carbon fuels.”

A market transition

Charles Griffith, director of the climate and energy program at the Ann Arbor-based Ecology Center, said his organization hasn’t come down one way or the other on changing the RFS, but he noted the country should continue to transition to the least carbon-emitting fuels.

“At one point, (ethanol producers) really needed additional markets for their product,” Griffith said of the early 2000s. “Now I think maybe we’ve pushed it a little too far, we need to calibrate it a little bit and make sure we’re doing it in a more sustainable way.”

While Griffith said the environmental impact of corn-based ethanol “is not a simple issue at all,” he added that there is concern about land use and chemical pollution impacts of expanding corn production.

“It’s not necessarily directly because of the RFS but … it’s not that hard to say that the policy probably made some of that stuff worse,” Griffith said.

MSU’s Dale said it’s important to ask about alternatives.

“I think the evidence is real clear that ethanol and biodiesel are a lot better than petroleum products,” Dale said.

Griffith countered that sticking to two choices unnecessarily constrains the market.

“In many ways, ethanol has been more of an economic development program than it has been environmental,” Griffith said. “It has had some value to American farmers, and I don’t want to take away from that value.”

Read 10569 times Last modified on Wednesday, 16 December 2015 00:03

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