Missouri, Iowa governors urge EPA to ditch plan to lower renewable fuel standards

Energy Associated Press

A plan to reduce the amount of renewable fuels required in the U.S. gasoline supply drew heated condemnation of the petroleum industry Thursday from two governors who said health of the ethanol industry is vital to their states' economy.

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Hundreds of people took turns reading prepared three-minute statements on an Environmental Protection Agency proposal to lower biofuel requirements set by Congress by 4 billion gallons this year and 5 billion gallons next year.

Thursday's event in Kansas City, Kansas, is the only public hearing the EPA plans before making a decision in November on the renewable fuel standard program. The EPA says it's reducing the volumes because infrastructure inadequacies limit how much can be consumed and because the industry isn't able to produce enough non-ethanol fuels to meet the requirements. However, corn growers and other supporters of the higher standard say they're needed to force oil companies to improve infrastructure at gas pumps to deliver ethanol fuel blends above the current 10 percent mix.

Iowa Gov. Terry Branstad, whose state is the nation's top corn and ethanol producer, and Missouri Gov. Jay Nixon both spoke against the standards.

"The EPA has a choice: protect the deep pockets of Big Oil and their monopolistic practices or nurture consumer choice, renewable energy growth and a healthy rural economy," Branstad told a panel of EPA officials.

Chris Grundler, director of the EPA's office of transportation and air quality, said the proposed standards are consistent with Congress' goal of increasing renewable fuel production and use over time, he said.

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"Simply setting the standards at levels targeted by Congress and trusting that this will sufficiently incentivize the market to achieve the mandates for 2016 would be irresponsible, and would have significant negative impacts including widespread noncompliance," he said.

The oil industry argues that many retailers aren't equipped to sell gasoline containing more than 10 percent ethanol and that customer demand doesn't warrant the investment retailers would have to make to upgrade their pumps.

"Oil and gas companies only control about 5 percent of retail gas stations. They're the ones who have to make that investment, but the demand isn't there because consumers aren't asking for those fuels," said American Petroleum Institute spokesman Bob Greco.

The U.S. has 214 biofuel plants, most of them using corn to make ethanol, with a capacity of nearly 15.5 billion gallons. Iowa, the biggest biofuel producer, has 42 ethanol plants and 13 biodiesel plants.

Environmental groups have argued that ethanol adds to global warming by removing millions of acres of land from the Conservation Reserve Program for use in corn production and has led to an increase in food costs worldwide as more U.S. corn is used for fuel.

Branstad, a Republican, noted that the price of corn has fallen from $6 a bushel in August 2013 to $3.45 a bushel now. He said the EPA's indecision on the fuel standards has created uncertainty in the market and stifled investment in technologies to deliver biofuels.

Nixon, a Democrat, questioned the EPA's authority to lower the standards.

"The federal RFS (renewable fuel standard) allows a waiver only if it will harm the economy or the environment," he said. "I'm not seeing how it's going to hurt our economy to produce cheaper, better, cleaner fuel, and it's certainly not going to hurt our environment."