California Ag TODAY: Growing Numbers to Stop Ethanol Mandate

Legislation introduced this week by Senators Dianne Feinstein, Tom Coburn (R-Okla.) and eight cosponsors to eliminate the corn ethanol mandate has won strong support from Western United Dairymen. “We are pleased to support Senator Feinstein's continued efforts on eliminating the mandate for corn ethanol. She was instrumental in seeing the ethanol subsidies expire and we believe that she will be just as successful with this effort,” said Western United Dairymen CEO Michael Marsh.

“This legislation provides a simple, effective solution to the problems caused by corn diverted to ethanol, driving up feed costs and consumer prices for meat, milk and energy,” continued Marsh. “California dairy families who are suffering from continued high feed prices support this effort to eliminate the federal corn ethanol mandate from the Renewable Fuels Standard (RFS), while maintaining provisions designed to grow the low-carbon biofuel industry.”

The Renewable Fuels Standard (RFS), created in the Energy Policy Act of 2005 and revised in 2007, requires refiners and blenders to use 16.55 billion gallons of renewable fuel in 2013. More than 13 billion gallons of this total will be met by the use of corn ethanol, a level that will increase in subsequent years.

The RFS also sets a target for 36 billion gallons of renewable fuels blended into gasoline by 2022 with the corn ethanol mandate scheduled to reach 15 billion gallons by 2015. Each year, EPA issues RFS rules with increasing volumes of renewable fuel blending that also include cellulosic and advanced biofuels that do not compete as feed sources.

Feinstein said the bill supports development of advanced biofuels, including those made from soybean oil, grasses and trees. But it would eliminate the mandate for corn-based ethanol, which currently represents the vast majority of biofuels produced in the United States. She said the corn mandate diverts a large proportion of the U.S. corn crop towards making fuel, raising animal feed and food prices.

In introducing the bill, Senator Feinstein said, “Under the corn ethanol mandate in the RFS, roughly 44 percent of U.S. corn is diverted from food to fuel, pushing up the cost of food and animal feed and damaging the environment. Oil companies are also unable to blend more corn ethanol into gasoline without causing problems for automobiles, boats and other vehicles. I strongly support requiring a shift to low-carbon advanced biofuels.” Feinstein added, “But a corn ethanol mandate is simply bad policy.”

Senator Coburn said, “The time to end the corn ethanol mandate has arrived. This misguided policy has cost taxpayers billions of dollars, increased fuel prices and made our food more expensive. Eliminating this mandate will let market forces, rather than political and parochial forces, determine how to diversify fuel supplies in an ever-changing marketplace. I’m grateful my colleagues on both sides on the aisle are prepared to take this long-overdue step to protect consumers and taxpayers from artificially high fuel and food prices.”

Cosponsors of the bill are Richard Burr (R-N.C.), Susan Collins (R-Maine), Bob Corker, (R-Tenn.), Kay Hagan (D-N.C.), Jeff Flake (R-Ariz.), Joe Manchin (D-W.Va.), Jim Risch (R-Idaho) and Patrick Toomey (R-Pa.).

This action eliminates the unnecessary pressure on corn prices, allowing the multi-billion dollar corn ethanol industry to compete directly with oil based on price and quality, not mandates.

Refiners will continue to blend corn ethanol into the fuel supply in the absence of a mandate, as ethanol is the preferred octane booster used to increase the efficiency of gasoline. Even without a mandate for its use, the economic benefits of mixing ethanol into gasoline would remain.

This proposal has strong support from dairy; beef; poultry; the prepared food industry; oil and gas; engine manufacturers; boaters; hunger relief organizations; and environmental groups. A list of endorsing organizations can be found here.