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Obama administration downplays dim biofuels study

The USDA is downplaying a new study that claims government biofuel mandates are unlikely to be met. The Obama administration insists the report’s conclusions are based on stale data.

The USDA is downplaying a new study that claims government biofuel mandates are unlikely to be met. Joined by biofuel and commodity groups in backhanding the National Academy of Sciences report, the Obama administration insists the report’s conclusions are based on stale data.

Passed as part of the 2005 Energy Policy Act, the Renewable Fuel Standard (RFS) mandates that by 2022 the United States should produce 15 billion gallons of biofuels (expected to be largely corn ethanol), 4 billion gallons of non-corn ethanol biofuels, 1 billion gallons of biomass-based biodiesel, and 16 billion gallons of cellulosic biofuels produced from wood, grasses, or non-edible plant matter.

The report, according to a National Academy of Sciences, concludes “production of adequate volumes of biofuels are expected to meet consumption mandates for conventional biofuels and biomass-based diesel fuel. However, whether and how the mandate for cellulosic biofuels will be met is uncertain. Currently, no commercially viable biorefineries exist for converting cellulosic biomass to fuel. The capacity to meet the renewable fuel mandate for cellulosic biofuels will not be available unless the production process is unexpectedly improved and technologies are scaled up and undergo several commercial-scale demonstrations in the next few years. Additionally, policy uncertainties and high costs of production may deter investors from aggressive deployment, even though the government guarantees a market for cellulosic biofuels up to the level of the consumption mandate, regardless of price.”

Asked about the report during a Tuesday morning press conference, Agriculture Secretary Tom Vilsack said his “first reaction to the report was ‘they aren’t as up-to-date as they need to be…’ I think they’re basing conclusions on old information.”

Vilsack then addressed the report’s claims of inadequate technology to achieve the government’s biofuel mandates by pointing to a recently announced “series of actions designed to help accelerate the (biofuels) effort. I’m confident that the country will be far better off (by) supporting a biofuel industry that allows us to reduce our reliance on foreign oil. It does it in a way that’s more energy efficient, has a more significant impact on reducing greenhouse gases and (improving) air quality and reduces significantly our reliance on foreign oil and all the issues and challenges that presents.”

That trumps suggestions “that we should stick with the same tired approach to energy production in this country.”

"Give up the ghost"

Vilsack said he remains “very bullish on the (biofuels) industry and will continue to be bullish. It’s really how the United States puts itself in a position to succeed by being innovative, by creating products that haven’t been created before. I’m excited about (biofuels) being used by the U.S. Navy.

“It’s unfortunate that reports based on, in my view, somewhat outdated information are suggesting we should just give up the ghost. America doesn’t do very well when it gives up on something which is innovative and creative. We’re not going to give up on this industry. This industry is too important to the United States, too important to rural America, too important to our … national security, too important to the whole innovative culture we’re trying to accelerate.”

The biofuels study will bolster proposed legislation by Virginia Rep. Bob Goodlatte and California Rep. Jim Costa that “would significantly weaken the Renewable Fuels Standard,” said a National Corn Growers Association (NCGA) release.

Proponents of the Goodlatte/Costa legislation claim it would ease pressure on reaching the biofuel mandates when the corn stocks-to-use ratio dips below a certain level.

“The U.S. ethanol industry is an integral part of job creation and economic opportunity throughout rural America,” said Garry Niemeyer, NCGA President. “This legislation would put progress made by the ethanol industry in jeopardy and we are asking members of Congress to oppose its passage.

“The ethanol industry is saving money for American consumers and producing jobs during a difficult financial time. The American farmer continues to meet the growing demand for corn as food, feed, fuel and fiber even when facing difficult years. We hope members of Congress will vote against a piece of legislation that will be a backwards step for our country’s fight for energy independence.”

The NCGA – joined by the American Coalition for Ethanol, the American Farm Bureau Federation, Growth Energy, the National Farmers Union, the National Sorghum Producers, and the Renewable Fuel Association -- also signed a group letter sent to Goodlatte and Costa.

The current high price for corn is not due to biofuels, the group claims. “Numerous studies have concluded that the RFS is a minor contributor to corn prices,” the letter states. “The most recent study, a July 2011 analysis commissioned by the International Centre for Trade and Sustainable Development, found that corn prices would have been exactly the same in 2009/10 if both the RFS and Volumetric Ethanol Excise Tax Credit (VEETC) had not existed."

Further, they say the legislation’s use of a stocks-to-use ratio should only be considered as “a starting point” for estimating potential price impacts and “the relationship between stocks-to-use and price is not consistent over time.” 

For the full letter, see here.

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