It may not be just farm group hype. Except for continued confrontations with the official state of California, the push for a federal renewable fuels standard (RFS) now has broad bipartisan support. More remarkable, farmers find themselves on the same side with the Environmental Protection Agency and some of the nation's most vocal environmentalists.
In California, however, Gov. Gray Davis recently announced his decision to delay by one year a three-year-old agreement to implement an ethanol-friendly initiative for fuel oxygenates in that state. Opposition to ethanol as a required fuel additive in California, the nation's largest fuel market, has been spurred by fears ethanol would raise the price of gasoline.
Officials and other residents in California also have expressed misgivings that the emerging ethanol processing industry, concentrated primarily in the Midwest and other grain-growing areas, can deliver enough ethanol to the West Coast in large enough quantity to supply California's needs.
An RFS now pending in Congress would give official government sanction of ethanol and biodiesel as a fuel oxygenate.
Grain and soybean producer groups now enjoy, in the language of the sports pages, a run of “unanswered points” in their argument for a renewable fuels standard that would phase out the petroleum-based methyl tertiary butyl ether (MTBE) as a fuel oxygenate. Months after its release, there has been no persuading response to a multi-sponsor study that, among other things, claims ethanol use could reduce crude oil imports by 2.9 billion barrels by 2016 — or an average of 302 million barrels annually.
In the Senate, inclusion of an RFS provision in this year's proposed energy package has been led by Majority Leader Tom Daschle, D-S.D., and Richard Lugar, R-Ind., the ranking minority member of the Senate Agriculture Committee.
The nation's grain and soybean producer groups, who long have been the leading proponents of ethanol and biodiesel fuels, have pushed for the standard because of the benefits to farmers and for prospects of decreased dependence on foreign energy source. They and others have also cited the ethanol-biodiesel advantage in slowing air and water pollution.
The proposed RFS would replace MTBE with “renewable fuels processed from grains and soybeans. The Environmental Protection Agency has identified MTBE as a groundwater pollutant.
An unanswered study has concluded that increasing the total gallons of renewable fuels contained in motor vehicle fuels, such as ethanol or biodiesel, from current levels to 4 percent by 2016 would provide energy security and other economic benefits to the United States. The study by John Urbanchuk of AUS Consultants was sponsored in part by the National Corn Growers Association (NCGA) the National Biodiesel Board and the Renewable Fuels Association.
“A renewable fuels standard as proposed by Sens. Chuck Hagel, R-Neb., and Tim Johnson, D-S.D., would reduce our dependence on foreign oil, improve our trade deficit, boost farm income, create new opportunities for rural businesses, and reduce farm program costs,” said John McClelland, director of energy and analysis for NCGA.
Similar RFS bills have been introduced by Sen. Tom Daschle, D-S.D., Sen. Tom Harkin, D-Iowa, and Rep. John Thune, R-S.D.
The analysis shows that implementing a renewable fuels standard would lead to the annual use of 7.6 billion gallons of ethanol in 2016.
“That level of ethanol use could reduce crude oil imports by 2.9 billion barrels by 2016, an average of 302 million barrels annually,” said McClelland. “That equates to approximately one oil supertanker a day for the next 15 years.
He says reductions in imports would lower U.S. dependence on imported oil to 65 percent compared to the 70 percent projected by the U. S. Department of Energy in 2016.
McClelland said the study cited other benefits that could be achieved by 2016:
The decrease in oil imports can reduce the U.S. trade deficit by $63.4billion.
Create 300,000 new American jobs.
Increase U.S. household income by $71 billion.
The projected the benefits to agriculture and rural economy include:
Use 2.5 billion bushels of corn for ethanol production by 2016. Current U.S. corn production is 9.4 billion bushels, of which 650 million bushels are used in ethanol production.
Corn prices will increase an average of 28 cents per bushel. Net farm income will increase an average of $6.6 billion annually. That could reduce direct government payments to farmers by $7.8 billion through 2016.
$10.5 billion in new rural economic investments by 2016 to build or expand the renewable fuel production facilities. Much of this new investment would be through farmer-owned, value-added businesses.
The report is available on the NCGA website at www.nega.com.