Ethanol producers say new rule unfair

The Obama administration proposed a rule Tuesday that may make it harder for ethanol producers to meet greenhouse gas emissions standards in a 2007 energy law.

The decision to factor in “indirect land use changes” could raise ethanol’s carbon footprint higher than that of conventional gasoline production, and may limit future production of corn-based ethanol in particular.

{mosads}The theory behind factoring indirect land use into emissions calculations is that as American farmers use more of the corn they grow to make fuel instead of food, farmers in other countries respond by converting carbon-capturing forests or grasslands into croplands to make up for the lost food supply. Overall, global emissions would rise because of the removala of the forest and grassland carbon “sinks.”

The proposal is likely to be met with concern in farm-state offices on Capitol Hill. Already, Sen. John Thune, a Republican from South Dakota, has introduced a bill to block the Environmental Protection Agency (EPA) from considering the land use activity in foreign countries when calculating ethanol “life-cycle” emissions.

Farm and ethanol producers also criticized the proposed rule, although they welcomed the announcement by EPA Administrator Lisa Jackson to put the proposed rule up for a peer review as part of the 60-day public comment period.

Tom Buis, CEO of the group Growth Energy, said, “Indirect land use theory uses speculative models and incorrect assumptions in an attempt to blame American farmers for deforestation in Brazil.”

Bob Dinneen, president and CEO of the Renewable Fuels Association, said there is too much uncertainty surrounding the calculation of indirect land use changes and their relationship with American ethanol production to be a reliable standard.

If indirect land use isn’t factored into the equation, the proposed rule shows that corn-based ethanol has a much lower carbon footprint than gasoline, Dinneen said.

The news from the administration Tuesday wasn’t all bad for the industry. Officials also announced the creation of an interagency task force designed to speed the development of the alternative fuel industry, in part by accelerating delivery of federal financial support for the industry.

Agriculture Secretary Tom Vilsack said the announcement shows the administration’s “firm commitment to making industry an integral part of the new 21st-century economy.”

Dinneen called the interagency group a “very positive step for the industry.”

{mospagebreak}The long-awaited proposed rule implements the Renewable Fuels Standard included in the Energy Independence and Security Act of 2007. The act requires that refiners blend 36 billion gallons of biofuels by 2022. Not more than 15 billions gallons could come from corn-based ethanol, a fuel with a large constituency of supporters on Capitol Hill but also a number of critics who argue it is uneconomical compared to gasoline and is not beneficial to the environment.

The act requires that new corn-based ethanol plants reduce carbon emissions by 20 percent compared with gasoline. Advanced biofuels like cellulosic ethanol would have to show a 60 percent greenhouse gas reduction to qualify under the new standard.

The act also requires the EPA to measure indirect land use when calculating ethanol’s life-cycle emissions. That language was a late add to the bill after a number of environmental groups questioned the environmental benefits of alternative fuels.

{mosads}Some of these same groups praised the proposed rule.

“Crucially, the EPA has rejected corporate agribusiness’s demand that pollution from land use change be ignored,” said Kate McMahon of Friends of the Earth in a statement. “Demand for land on which to grow crops for biofuels can lead to deforestation and destruction of grasslands and wetlands, resulting in substantial global warming pollution.”

The immediate impact on the ethanol industry isn’t clear. Most of the plants either in operation or under construction would be grandfathered in, and would not have to meet the carbon emission standards. But producers fear too stringent a rule could make it harder to attract investors to pay for the follow-on fuels to corn-based ethanol.

The EPA’s Jackson said the proposed rule would also include instructions on how ethanol producers could meet the greenhouse gas emissions cuts relative to gasoline as called for in the 2007 law.

The notice of proposed rulemaking ran more than 600 pages. Public comments will be taken for 60 days before a final rule is announced.