In early May, President Obama instructed the USDA, Department of Energy and EPA to form a working group to support the development and expansion of domestic biofuels. As positive as that sounds, without drastic changes to some underlying government assumptions, the fledgling Arkansas biodiesel industry — already hard-hit, like biofuel refineries across the nation — could be in dire straits.

While Obama’s push is expected to jump-start a national biofuel effort, the EPA has already been implementing the 2007 Energy Independence and Security Act (EISA), which calls for 36 billion gallons of renewable fuels in 2022. That is “enough to cut petroleum consumption by nearly 11 percent,” said Lisa Jackson, EPA administrator, at the working group announcement.

For more, see EPA regulations.

Jackson pledged the final biofuel rules would be “informed by the best science.” That is cold comfort to the biofuels industry, which points to the EPA’s current method of calculating indirect land use (ILU) as especially galling.

The EPA says increased U.S. grain demand for ethanol would cause ripples overseas, where farmers would move to take advantage and change land-use patterns. A dramatic example is rainforests toppled for grain production, thus increasing environmental degradation and climate change.

However, such assumptions are not only shaky but unfair, says Troy Hornbeck who, along with his brothers, oversees several agriculture-related businesses including Hornbeck Seed and Arkansas SoyEnergy Group, a biodiesel refinery outside DeWitt, Ark.

“If we’re going to (consider) ILU, it’s one thing to say Brazil is destroying the rainforest to grow soybeans. But here in the United States, we already have soybean acres established. Those are ongoing acres and we’re doing nothing different than we have (in the past). Why would we take another country’s issue and apply it to our EPA regulations? That makes absolutely no sense.

“We export most of the soybeans out of the United States anyway. We’re not using all the soybeans we’re growing domestically. It should be a non-issue, to be honest.”

For more on the Hornbeck operation, see Biofuels plant and breeding program mesh.

Soybean biodiesel “reduces greenhouse gases by 78 percent,” says Jon Hornbeck. “Land that isn’t even located in the United States should have no bearing (on ILU), shouldn’t be factored into the greenhouse gas emission” calculations.

While South American rainforests are an issue, “when was the last time we cleared rainforest here in the United States? That has nothing to do with actual emission standards of biodiesel.”

At a recent hearing of the House Agriculture Subcommittee on Conservation, Credit, Energy, and Research, Collin Peterson had his own issues with the EPA calculations. The House Agriculture Committee chairman is no longer confident that “I shouldn’t be going after you folks (and) that you … have any idea what’s going on here. You are going to kill off the biofuels industry before it ever gets started.”

Peterson continued to harangue the EPA, asking, why “you put indirect costs on corn … and soybeans and not put it on oil? What about the indirect costs of protecting the oil shipping lanes in the Middle East? That’s not counted. I mean, this is ridiculous.”

Many see it that way. State and national commodity groups are concerned and “pretty deep in disagreement with the standards,” says Troy Hornbeck. “But you take the average soybean grower and I doubt they even know (this is happening). This is one of those things that kind of blows by and (comes to light) only after a business is ruined.”

The EPA has opened a 60-day comment period on the new regulations and the Hornbecks hope farmers make plenty of noise. “There’s a time (factor) and we don’t know if it’ll work or not. But the closer to a flood (of comments), the better off we’ll be.”

To produce and maintain a viable biofuels industry what’s truly needed is more emphasis on the Renewable Fuel Standard (RFS). “We need to move towards establishing a national standard, getting it pushed through quickly. The biodiesel industry is struggling today. We need all the help from President Obama and anyone else to push the standards forward.

“We already know that soy/biodiesel reduces greenhouse gas emissions whether ILU is considered, or not. … We’re getting away from the original (aim) of promoting an alternative fuel. We need to get back to pushing renewable fuels, pushing a standard and increasing the standard.”

Hitting on the same theme, Jon Hornbeck has “trouble understanding why the Obama administration, from the very start, has said, ‘we’re pro-alternative fuels. We’re all about bioenergy and all these alternative fuel sources.’

“And that’s fine. But the EPA, under the (Obama) administration, is now coming out with things to slow down the industry, halt it, or kill it altogether. That doesn’t make any sense to me. How can we have an administration that says, ‘we fully support it and will do all we can,’ and have a division of government doing directly the opposite? That’s typical politics, I assume.”

The country — particularly in the current economic downturn — needs to create jobs, says Terry McCullars, SoyEnergy general manager. “There are now four biodiesel facilities in Arkansas. If we don’t see some changes pretty quick at the state and federal (levels), there will be job losses there.”

And the spillover business from those facilities will be lost. “Now is not the time to be taking jobs out of (circulation). The Obama administration and our state (officials) talk jobs — talk green jobs — but we’re not seeing it. Where does the rhetoric stop and the reality start?”

During the spring legislative session, “we tried to get some fuel standards for the state of Arkansas. We were really trying to create a B-5 standard for the state and ran into major opposition.”

The bill would have created an additional 1,500 jobs in the state, claim the Hornbecks. And a B-5 mandate, “would displace 60 million gallons of petroleum diesel,” says Troy. “That’s just by adding 5 percent biodiesel into fuel. … There was even language in the bill that if (a biofuel) was just 15 cents more costly (than petroleum) the standard could be (frozen). There was enough language in there to protect the petroleum industry and still create new jobs and a standard for alternative fuels. That would reduce our dependence on foreign fossil fuels.”

Those factors didn’t sway enough legislators. Even Gov. Mike Beebe, who had earlier signed a pact with other governors to promote biofuels, “did absolutely nothing to help this bill get through. He helped kill it.”

If a fuel standard had been passed, the biofuel produced in the state could have been “running in-state and in-channel. Now, we’ll use what we can (in-state), but we’ll have to take it outside the state to sell it.”

Of neighboring states, the Hornbecks point to Missouri as an example on how to approach biofuels. “They seem to be on the ball — with direction and drive — to influence soybean diesel usage,” says Jon. “Missouri is definitely ahead of the game in the Mid-South.”

“Illinois has a B-11 mandate (the largest in the nation) — and that’s where our president is from,” says Troy. “The Iowa legislature recently passed a B-5 mandate. Minnesota has had a mandate for several years. And there have been no problems” where the mandates have passed.

Mid-South growers need to be concerned about the region’s biofuel industry. “Not just the soybean side of it, but all the different things that alternative fuels provide: environment, security, less dependence on foreign oil,” says Jon. “Those interested in any of this need to be calling their federal representatives fast and furious and saying, ‘This must be resolved.’ And they need to file a complaint with the EPA.”

McCullars points to the cyclical nature of the energy debate. “We were looking at these same issues in the 1970s.”

McCullars laments that last year, when the price of fuel dropped from $4 per gallon, the immediacy of the issue faded. “Now, the average American is saying, ‘Well, the price of fuel is down and we don’t have to worry about alternative fuels.’

“We have got to get away from that mentality and understand that the price of diesel and gasoline is going to go back to $4 and $5. If anyone disbelieves that, I’d be willing to take the bet. We must address this situation.

“If we don’t do it now, I promise you we’ll (soon) be talking about the same thing, trying to solve a problem that should have been fixed 30 years earlier.”

Right now, “we have a biodiesel industry that’s functional. (Producing) cellulosic fuel is possible but not functional — no plants are running. We have ethanol, let’s use it. Let’s use what we have (as a foundation), support it, and then build upon it.”

For more on the federal biofuel effort, see Obama's biofuel initiative and Concerns about biofuels initiative.

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