Proposal could hurt production
FAIRMONT – The U.S. Environmental Protection Agency has proposed a rollback of the renewable fuel standard’s biofuel requirements this year. If the proposal becomes policy, it likely will affect ethanol production.
“The RFS put in place in 2007 increased the amount of ethanol in the fuel supply,” explained Jim Stark, vice president of investor and media relations at Green Plains Renewable Energy.
The Omaha, Neb.-based ethanol producer recently purchased the Fairmont ethanol plant. Stark expects Green Plains Fairmont to be producing at capacity, about 9.6 million gallons annually, by the end of January.
“We knew about the (proposed) EPA rollback when we looked at purchasing those plants,” he said. “When the (RFS) standard was written, it was assumed that gas demand would continue to rise, but the demand started to decline in 2008 with the recession.”
Gas demand has leveled off to about 133 billion gallons per year. With a 10 percent ethanol blend, about 13.3 billion gallons of ethanol is needed in the United States annually.
The RFS has set the production and consumption volume for ethanol-based biofuels in 2014 at 14.4 billion gallons. However, the EPA proposal reduces that level to 13 billion gallons, according to the Minnesota Biofuel Association, a non-profit trade group representing the renewable fuels industry in the state.
Under the RFS, the availability of cheaper fuels with higher blends of ethanol, such as E15, which contains 15 percent ethanol, was expected to increase in tandem with the rise in ethanol production and consumption, according to an association release. E15 is, on the average, 10 to 15 cents cheaper than regular gasoline, but the supply and availability of E15 and other higher ethanol-blended fuels will be limited should the EPA scale back ethanol production this year.
The EPA’s proposed level is even lower than the volume for 2013, which was 13.8 billion gallons.
“We run at a higher rate than 13.3 (billion gallons), due to export demand, which could potentially be 800 million to a billion gallons in the next 12 months,” Stark said. “That’s more than is being produced in the U.S. today.”
He pointed to countries in Asia and South America, specifically China and Brazil, as foreign entities seeking U.S.-produced ethanol. For decades, fuel in Brazil has contained a 25 percent ethanol blend.
“As a fuel additive, ethanol helps gas burn cleaner,” said Stark, adding that the higher octane rating of 113 for blended fuels results in a more efficient fuel. “That’s why countries outside of the U.S. are looking to start blending more ethanol in fuel.
“Ethanol is a permanent part of our fuel supply,” he said.
Should the RFS be adjusted to the EPA’s proposal, the Minnesota Department of Agriculture has estimated the state’s economic contribution from the biofuel industry, which averages $5 billion annually, would drop $610 million and result in the loss of more than 1,500 jobs.
The Minnesota Biofuels Association recently launched a campaign that provides Minnesotans with a platform to communicate their opposition to the EPA’s proposal. The campaign is available at www.mnbiofuels.org and directs comments from the public to the EPA and White House, as well as the state’s senators and representatives. The deadline to submit comments is Jan. 28.