SALEM, Ohio — The U.S. Environmental Protection Agency announced Nov. 16, that the agency has not found evidence to support a finding of severe “economic harm” that would warrant the granting of a waiver of the Renewable Fuel Standard.
The standard, which requires a minimum amount of ethanol be blended into gasoline, has become a contentious issue in a year of record drought and near-record high grain prices.
It will require 13.8 billion gallons of corn-based ethanol to be blended into gasoline in 2013, or the equivalent of 4.5 billion bushels of the nation’s corn crop.
“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. “But our extensive analysis makes clear that Congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact.”
To support the waiver decision, economic analyses of impacts in the agricultural sector, conducted with USDA, showed that, on average ,waiving the mandate would only reduce corn prices by approximately 1 percent. Economic analyses of impacts in the energy sector, conducted with DOE, showed that waiving the mandate would not impact household energy costs.
The decision has set off a fury of responses, ranging from strong support among many crop farmers and ethanol plant operators, to deep frustration among livestock organizations and other end users of corn and small grains.
“We support the decision the U.S. Environmental Protection Agency has made to continue to uphold the Renewable Fuel Standard promoting American-grown energy,” said Tadd Nicholson, executive director of the Ohio Corn and Wheat Growers Association, in a statement to media. “Thanks in part to the contribution made by corn ethanol and biofuels, our dependence on foreign oil continues to decline, keeping billions of dollars in our economy.”
The National Corn Growers Association expressed similar sentiments, citing the jobs ethanol helps support.
“The ethanol industry plays a pivotal role in job creation throughout the country supporting over 400,000 jobs nationwide,” said NCGA President Johnson, in a statement to media. “This includes many in ethanol plants in rural America. The RFS advances the use of domestically produced renewable fuels, encourages new technologies and enhances U.S. energy independence.”
POET Ethanol, which operates production plants in Ohio, said the decision helps the ethanol industry move forward with greater confidence.
“The EPA today made a sound decision in denying a waiver of the Renewable Fuel Standard,” said POET CEO Jeff Lautt,” in a statement to media. “As studies have shown, a waiver would have likely had little to no impact on commodities prices in the aftermath of the recent drought. This effort was nothing more than the latest attempt by renewable fuel opponents to undermine policy that has helped make America stronger.”
The National Cattlemen’s Association said the decision makes the situation worse on cattle producers struggling to afford feed.
“In light of the most widespread drought to face the country in more than 50 years, the refusal to grant this waiver is a blatant example of the flawed policy of the RFS,” said NCBA President J.D. Alexander, a cattle feeder from Pilger, Neb., in a statement to media.
“The artificial support for corn ethanol provided for by the RFS is only making the situation worse for cattlemen and women by driving up feed costs.”
In comments submitted by NCBA to the EPA in October, NCBA stated that the cattle industry, along with other livestock groups, has suffered a significant economic impact due to the RFS mandate and the drought.
From December 2007 to August 2012, the cattle feeding sector of the beef industry lost a record $4 billion in equity due to high feed costs and economic factors that have negatively affected beef demand.
A coalition of dairy, poultry and other livestock producers rounded out the opposition to the decision in a joint statement.
“We are extremely frustrated and discouraged that EPA chose to ignore the clear economic argument from tens of thousands of family farmers and livestock and poultry producers that the food-to-fuel policy is causing and will cause severe harm to regions in which those farmers and producers operate,” its participants said.
The coalition calls for a fair playing field, saying many farms and farm businesses have gone out of business in recent months due to the high cost of feed.
“How many more jobs and family farms have to be lost before we change this misguided policy and create a level playing field on the free market for the end users of corn?” its members asked. “It is now abundantly clear that this law is broken, and we will explore remedies to fix it.”
The Energy Policy Act of 2005 required the EPA to implement a renewable fuels standard to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel. A waiver of the mandate requires EPA, working with USDA and DOE, to make a finding of “severe economic harm” from the RFS mandate itself.
This is the second time that EPA has considered an RFS waiver request. In both cases, analysis concluded that that the mandate did not impose severe harm. In 2008, the state of Texas was denied a waiver.