Fuels America is a new coalition of groups and individuals who have a stake in the success of biofuels. The coalition is founded on a simple core principle: Renewable fuel is good for the U.S. economy, for our nation’s energy security and for the environment. BIO is a founding member of the coalition and along with others we ask that you join the fight by visiting the website and pledging support for the Renewable Fuel Standard. Interested individuals may also wish to submit comments this week to the EPA, which is currently considering requests by the governors of several states for a waiver of the RFS.
EPA ought to assess the waiver requests based on the science. Several university studies are already available, all showing that a waiver of the RFS would have very little impact on corn and livestock feed prices but a very negative impact on the development of advanced biofuels.
The newest study comes from the University of Missouri’s Food and Agricultural Policy Research Institute. The report finds, “Waiving the mandate, a minimum use requirement, has limited market impact if people were going to use almost as much as the mandate anyway.” It also finds that the waiver would have an impact on corn prices only in the 2013/2014 harvest year – long after farmers have dealt with the impacts of the 2012 drought – and the impact would be only 3.2 percent of the baseline price. Under one potential scenario, though, the FAPRI researchers find that corn prices could end up higher with a waiver of the RFS.
An earlier August study from the Farm Foundation and Purdue University found, “It is important to understand that economic harm in the tens of billions of dollars has already been done by the drought. The corn price is substantially higher than would have transpired in a normal year. In considering a waiver, EPA cannot change the loss, but can only redistribute it among the affected parties—ethanol producers, livestock producers, corn growers, and ultimately domestic and foreign consumers.” This study suggests that with the flexibility already built into the RFS, the price of corn could drop by $0.67 per bushel without any action by EPA – but that depends on the actions of gasoline refiners.
Another study by Iowa State University’s Center for Agricultural and Rural Development comes to a similar conclusion that there already is substantial flexibility in the RFS. “The desire by livestock groups to see additional flexibility on ethanol mandates may not result in as large a drop in feed costs as they hope,” the authors conclude.
In fact, a new report from the UN Food and Agriculture Organization (FAO) finds that biofuel co-products can provide many benefits when used as livestock feed. Use of corn ethanol DDGs in the United States has been increasing due to nutritional value and price.
Few of the studies measure the potential impact of the RFS waiver on the advanced biofuel sector, which depends on stability in the policy to secure investment capital. Advanced biofuel developers have publicly worried about progress in cellulosic biofuel being stymied by an RFS waiver. But that is evidently not a concern to the livestock groups, as demonstrated by a comment to OPIS from Joel Brandenberger, president of the National Turkey Federation: “If a substantial waiver proves to have little impact on ethanol production or use, then it will be clear the ethanol industry has matured and should be able to grow and prosper without the support of federal mandates.” The National Turkey Federation is a founding member, along with petroleum refiners, ofa counter-campaign against the RFS, called Smarter Fuel Future, that seeks to ensure that America’s crops and cropland are dedicated to providing food and feed to their industry, with none used for biofuel – even advanced biofuel.