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South Dakota-based ethanol maker Poet operates four plants in Minnesota, including this one in Lake Crystal.

JERRY HOLT • jerry.holt@startribune.com,

Lessened ethanol mandate proposed for fuel

  • Article by: DINA CAPPIELLO and MARY CLARE JALONICK
  • Associated Press
  • November 16, 2013 - 10:49 AM

 

– The Obama administration proposed Friday to reduce the amount of ethanol in the nation’s fuel supply for the first time, acknowledging that the biofuel law championed by both parties in 2007 is not working as well as expected.

While the proposal highlights the government’s struggle to ramp up production of homegrown biofuels that burn cleaner than gasoline, it is unlikely to mean much for consumers at the pump.

The change would reduce by almost 3 billion gallons the amounts of ethanol and other biofuels blended into gasoline in 2014.

The 2007 law tried to address global warming, reduce dependence on foreign oil and prop up the rural economy by requiring oil companies to blend billions of gallons of biofuels into their gasoline each year. But politicians who wrote the law didn’t anticipate fuel economy to improve as much as it has in recent years, which reduced demand for gasoline.

Meanwhile, next-generation biofuels, made from agricultural waste such as wood chips and corncobs, have not taken off as quickly as Congress required and the administration expected.

President Obama has championed biofuels since his days representing Illinois in the Senate, and his administration has resisted previous calls to lower biofuel volumes or repeal the law.

EPA officials said they were still committed to alternative fuels as part of a comprehensive energy strategy. If the EPA stuck to the volumes mandated by law, the amount of biofuel required would generate more ethanol than many engines can safely handle, officials said.

“We have made great progress in recent years, and EPA continues to support the RFS goal of increasing biofuel production and use,” said EPA Administrator Gina McCarthy, referring to the 2007 law called the Renewable Fuel Standard.

Biofuel supporters, however, said the proposal marked a departure for the Obama administration.

“This is the first time that the Obama administration has shown any sign of wavering,” said Brooke Coleman, executive director of the Advanced Ethanol Council.

Bob Dinneen, head of the Renewable Fuels Association, the Washington group that lobbies on behalf of the ethanol industry, said the announcement is ill-timed as the country is harvesting a record corn crop. He said the industry may sue if the proposal is not altered.

“This is exactly the wrong time to be reducing the required volumes of renewable fuels,” Dinneen said.

In Minnesota, the lowered ethanol target, if approved, potentially threatens the future of some ethanol plants, said Tim Rudnicki, executive director of the Minnesota Biofuels Association. Two of the state’s 21 ethanol plants, in Fairmont and Buffalo Lake, currently are closed, although new operators have said they intend to reopen them.

“We really need to crunch the numbers, but it would mean one of two things — either there would be plant closings or somebody is going to have to figure out how to export a heck of a lot more ethanol,” Rudnicki said in an interview with the Star Tribune.

Minnesota ranked fifth nationally in ethanol production in 2011, with 1.1 billion gallons produced and 79 percent of it exported outside the state, according to Minnesota Agriculture Department data. The state also has three biodiesel plants.

Minnesota Corn Growers Association President Ryan Buck said the proposed ethanol reduction is happening as corn prices are falling and farmers are harvesting the largest projected crop in U.S. history. He said in a statement that it would have “serious repercussions throughout the entire economy — especially in rural areas that rely on agriculture.”

Jeff Lautt, CEO of Sioux Falls, S.D.-based ethanol maker Poet, which has four ethanol plants in Minnesota, said EPA’s proposed blending numbers, if approved, would be a “complete win for the oil industry” and a retreat from the nation’s policy of promoting gasoline alternatives.

Poet, the nation’s second-largest ethanol maker, is building one of the first U.S. plants to produce ethanol from non-food or cellulosic plant material.

Lautt said Poet’s plan to build more such plants next to its existing corn-ethanol plants would be in jeopardy if the government scales back the biofuel mandate.

 

Staff writer David Shaffer contributed to this report.

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