The New Renewable Fuels Levels - Love Them or Hate Them?

This week I’ve been visiting the great state of Missouri to learn more about different types of sectors of the ag and aquaculture industries.

On Monday, our group visited an Angus seedstock operation, saw a robotic dairy operation and visited the University of Missouri’s shrimp and tilapia research facility. Today we’ll be visiting a free range poultry operation and a cow-calf business. It’s amazing to see different types of operations and what it takes to make them economically viable.

Last week, my colleagues attended Agritechnica – the world’s largest tradeshow for farm machinery – and the themes included investment, innovation and precision technology. Companies displayed their new lines in equipment and systems designed to meet the demands of modern agriculture, environmental requirements and legal demands. To read more, go to news and search Agritechnica or click here.

On Friday, the US EPA proposed for public comment the levels of renewable fuels to be blended into gasoline and diesel as required by Congress under the Energy Independence and Security Act of 2007. The proposal seeks comment on a range of total renewable fuel volumes for 2014 and proposes a level within that range of 15.21 billion gallons.

EPA says we are now at the “E10 blend wall,” the point at which the E10 fuel pool is saturated with ethanol. If gasoline demand continues to decline, continuing growth in the use of ethanol will require greater use of higher ethanol blends such as E15 and E85.

US Agriculture Secretary Tom Vilsack said it's important to take a long-term approach to the RFS. He said improved distribution and increased consumer use of renewable fuels are critical to the future of the industry.

POET CEO Jeff Lautt said the EPA’s proposed renewable fuel volumes are well below what the ethanol industry is capable of supplying for American drivers in 2014, and POET plans to address the issue in detailed comments to the agency.

“America is looking at a possible record corn crop, and the opportunity to offer more affordable fuel options to consumers has never been better. At the same time, cellulosic ethanol capacity is coming online in a large part thanks to significant investment from grain ethanol producers such as POET. The proposed reduction from EPA is troubling, as it not only cuts grain ethanol use below the levels set by Congress, it cuts them to a level below the 13.8 billion that was met in 2013.

“Our world has been beholden to the oil industry for a century, and ethanol has provided the first real alternative to gasoline in history. The Renewable Fuel Standard was created to provide a choice to consumers outside of oil-based fuel. We must seek ways to build on that work, not move backwards. Let’s be clear: This is about market share for our fuel supply. Under this rule, American drivers and American farmers lose and Big Oil wins.”

National Farmers Union (NFU) President Roger Johnson also expressed his concerns. “We are deeply disappointed in EPA’s apparent willingness to reduce total renewable fuel requirements based on the oil industry’s fictitious ‘blend wall’ argument. Big oil has determined that biofuels are taking their market share, so they have prevented increased amounts of biofuel to be sold at gas stations.

“At a time when advanced and cellulosic biofuel plants are just starting to come online, the EPA is sending a negative signal which will stifle investment in this nascent industry,” Johnson said. “Lowering renewable fuel targets below that which can be produced and below what is already being produced will sink corn prices, kill jobs and damage rural economies.”

Have a great week!

Sarah