Ethanol industry lashes out at EPA's proposed blending levels for biofuels

Ethanol industry leaders on Tuesday denounced the Obama administration's proposed renewable fuel policy, saying it would illegally scale back mandated blending of biofuels under a 2007 federal law and represents a "war on farmers."

The harsh criticism from top executives of two ethanol trade groups drew applause from hundreds of industry officials at the 2015 Fuel Ethanol Workshop & Expo, a large conference being held this week in Minneapolis.

"This administration is rolling back a program that by any measure has been an unmitigated success," said Bob Dinneen, CEO of the Renewable Fuels Association, the Washington-based lobbying group for the ethanol industry.

After Dinneen's hour of criticism, Brooke Coleman, head of the Advanced Ethanol Council, took the podium to add more. Their ire was provoked by the EPA's release on Friday of a long-awaited proposal for how much ethanol must be blended into the nation's fuel supply.

Under the proposal, the ethanol mandate would increase in coming years, but not at the aggressive rate set in the 2007 federal law called the Renewable Fuel Standard, or RFS.

The EPA, which has authority to adjust the mandate, expects to issue final numbers in November.

"President Bush signed the most progressive biofuel policy in the world, and President Obama at least to this point has been too weak-kneed to implement it," said Coleman, who represents ethanol producers who make advanced, lower-carbon biofuel from plant materials like corn cobs or grass instead of corn kernels.

The EPA says the levels set in 2007 are unworkable. Unless they're adjusted, the agency says, they would require an impossible, manyfold increase next year in the production of advanced biofuels. The agency was quick to respond to the ­criticism in Minneapolis.

"There continues to be a lot of overheated rhetoric on this topic," said Christopher Grundler, director of the EPA Office of Transportation and Air Quality, in an interview with the Star Tribune. "The EPA's job on this is to try to gather as many facts as we can, read the law in the best way that we know how and put out a proposal that meets the test of looking at the science, looking at the data … as well as a good dose of common sense. And that's what we have tried to do here."

The law set ambitious goals to expand production of advanced biofuels. A complex system of market-linked incentives was intended to spark investment in advanced biofuel production, as well as fuel pumps to dispense higher-ethanol blends. Most gasoline is E-10, or 10 percent ethanol, and ethanol makers want higher blends to gain a bigger slice of the U.S. fuel market.

But higher-ethanol blends like E-15, with 15 percent ethanol, are not widely sold. That constrains the ethanol market to what the industry calls the 10 percent "blend wall." Cellulosic ethanol technology also has been slow to develop, with the first three U.S. commercial-scale plants only now starting up. Meanwhile, the oil industry, which stands to lose market share, wants the RFS repealed.

Dinneen said that the Obama administration, by proposing a lower renewable fuel mandate, is encouraging fossil fuels that contribute to climate change. "For an administration that seems to care about energy diversity and seems concerned about runaway fracking, this rule will result in less diversification, more fracking, more tar sands, more deep water drilling, more petroleum and less renewable fuels," Dinneen said. Tar sands is a heavy oil extracted in Canada.

He said the coal industry complains of a "war on coal" in relation to EPA's Clean Power Plan to cut carbon emissions at coal power plants. "I am beginning to think that this EPA has declared a two-front war because now they seem to have a war on farmers," he said.

Coleman said the emerging cellulosic ethanol is hurt the most because, under the proposed blending levels, it would displace corn ethanol in the U.S. fuel market. "That is a cannibalistic business model that nobody is going to sign up for," Coleman said. "If you have to eat your own to innovate, you are not going to innovate. What the Obama administration has really been wrong about is hoping that that's OK."

Grundler of the EPA rejected those criticisms, saying the proposed blending numbers tell a different story. "When I look at the math and the numbers I see growth in both corn ethanol and I see a six-times growth in the volumes of cellulosic that's required. … We're providing every one of these fuels a growth path. The marketplace is going to choose what the different mix of fuels ultimately will be."

While lashing out at the EPA, the industry leaders had good things to say about the U.S. Department of Agriculture's ethanol policy under the Obama administration. On Friday, the USDA announced a $100 million program to help expand E-15 pumps and create a bigger market for ethanol — a potential plus for the industry.

David Shaffer • 612-673-7090