At a round-table discussion Wednesday, opponents of a federal requirement that ethanol be blended in America’s gasoline squared off with Bob Dinneen, president and CEO of the Renewable Fuels Association, at the National Ethanol Conference in Las Vegas.
Marty Durbin, executive vice president of government affairs at the American Petroleum Institute, said his organization has always supported an all-of-the-above approach to domestic energy; it only seeks to repeal the requirement that the oil industry use cellulosic ethanol under the Renewable Fuel Standard, or RFS. He argued that commercial cellulosic ethanol production has not yet happened, so it is unreasonable to require companies to purchase it.
“We’re not against renewable fuels. We’re not against the RFA. We’re not against ethanol. We think this program doesn’t work, we’ve been trying for seven years to make it work. At this point, time to start over,” Durbin said.
Dinneen pointed out that a commercial-scale cellulosic-ethanol plant is online and others are in construction and that the RFS has flexibility built in. Refiners can purchase renewable identification numbers, or RINs, which are a kind of renewable-fuel credit, rather than ethanol itself, to account for these gaps. Additionally, the Environmental Protection Agency has the power to waive the RFS should extraordinary circumstances arise.
U.S. corn yield suffered during last year’s drought, leading some industry groups to blame the ethanol industry for higher food prices, claiming that the fuel was using precious corn that would otherwise be used as animal feed.
Louis Finkel, executive vice president of government affairs at the Grocery Manufacturers Association, said it isn’t only ethanol that has caused the food industry’s margins to tighten, but it is a “significant factor.”
He argued that the RFS has affected food prices more than the price of oil; while oil prices affect transportation costs, the industry uses cheap natural gas for heating and powering facilities, balancing out overall energy costs.
Dinneen noted that food price inflation in 2010 was 0.8%, the lowest in 46 years, and that the rate of food inflation has remained low since the RFS was implemented several years ago. He said that if the biofuels industry wasn’t helping to keep oil prices down, transportation costs would play a bigger role in food producers’ worries.