Are Biofuels The Answer to Russia -Induced Gas Prices? FarmFutures.
[FarmFutures] Since Russian President Vladimir Putin accelerated his military build-up around Ukraine, gas prices have increased by nearly a dollar per gallon.But biofuels continue to remain overlooked as an option to increase domestic energy supplies, according to a fact sheet from the White House on President’s Biden’s plan to respond to Putin’s price hike at the pump.
The first part of the President’s plan is to immediately increase supply by encouraging domestic production now and through a historic release from the Strategic Petroleum Reserve to serve as a bridge to greater supply in the months ahead.
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Biden is calling on Congress to make oil companies pay fees on their wells from leases they haven’t used.
Nowhere in the discussion of achieving “real” American energy independence is anything of the tool available today – biofuels in the current fuel supply – to offset the rising costs of gasoline.
Geoff Cooper, Renewable Fuels President and CEO says Biden’s plan is:
Baffling to us that President Biden continues to overlook ethanol, which is the most readily available, lowest-cost, and lowest-carbon option for extending our nation’s fuel supply.
Cooper adds, “Rather than draining our strategic petroleum reserve and scolding U.S. oil producers for failing to increase production, we believe the administration should empower farmers and ethanol producers. They are eager to do their part to deliver economic relief and energy security for their fellow Americans.”
Today, ethanol is selling for $1 per gallon less than gasoline, and Cooper explains the ethanol industry is sitting on record ethanol inventories and spare capacity, yet access to the marketplace continues to be limited by decades-old regulatory barriers that “never made sense.”
The current excess ethanol capacity domestically is nearly the same as the amount of Russian gas the U.S. had been importing: roughly 83 million barrels compared to 87 million barrels.
Farmers stepping up
Sen. Chuck Grassley in a recent weekly column which also detailed that excess ethanol capacity could replace current Russian imports, said:
Let American farmers prime our energy pump with homegrown energy.
“We want to help address the current crisis; please let us,” Cooper pleas.
The surge and eventual passage of the Renewable Fuel Standard was grounded in the national security need to diversify away from fuel supplies in the hands of other countries that don’t agree with U.S. democratic principles.
Since the Renewable Fuel Standard was enacted in 2005, America’s crude oil imports have dropped almost 50%. Homegrown, plant-based ethanol displaces the gasoline produced from more than 700 million barrels of oil every year, Growth Energy states.
Today, the argument and need to continue to create more home-grown fuels is the same if not required even more. Wholesale ethanol has recently traded for approximately $1.20 cheaper than gasoline per gallon, a discount that is passed on to consumers and amplified in higher blends such as E15, E30 and E85.
“If we replaced just one-third of regular E10 fuel sales with E15, we would fully replace all gasoline from previously imported Russian oil,” the corn grower leaders say. “When it comes to cost, blending more ethanol, not less, is an immediate step to help lower fuel prices.”
Encouraging E15 use
Cooper says simple administrative actions could unleash the power of renewable fuels to immediately reduce pump prices without sacrificing the health of our environment. “Yet, the strategic national asset that is our renewable fuels industry continues to be neglected by this administration,” he says.
A 2021 court decision resulting from oil industry efforts to limit the growth of higher ethanol blends reversed year-round market access for E15, beginning this summer, absent action from the Biden administration or Congress.
In the Senate, Grassley and Sen. Joni Ernst, R-Iowa, and Sen. Amy Klobuchar, D-Minn., introduced the Home Front Energy Independence Act, and in the House the companion bill was introduced by Reps. Randy Feenstra, R-Iowa, Cheri Bustos, D-Ill., Ashley Hinson, R-Iowa, and Angie Craig, D-Minn.
In response to rising gas prices and the global energy crisis due to the war in Ukraine, the Home Front Energy Independence Act would make the sale of E15 year-round permanent, create a tax credit for higher biofuel blends, streamline E15 labeling, provide funding for E15 infrastructure, extend the biodiesel tax credit for three more years, and ban imports of Russian petroleum products.
In a letter to the White House, American Farm Bureau Federation, Growth Energy, National Corn Growers Association, National Farmers Union, National Sorghum Producers and the Renewable Fuels Association explain that an immediate move to restore year-round sales of E15 can ease the impact of oil market disruptions and surging gas prices caused by Russia’s invasion of Ukraine.
Similarly, a bipartisan group of senators, led by Sens. John Thune, R-S.D., and Dick Durbin, D-Ill., sent a letter to President Biden urging him to help curb rising domestic energy costs and displace Russian oil imports by increasing access to higher blends of American biofuels.
In their letter, the senators called on President Biden to use his administrative authority to permit the sale of E15 fuel over the 2022 summer driving season, extending the Reid vapor pressure (RVP) waiver from June 1 through September 15.
A similar letter from bipartisan House members urged President Biden to both immediately reinstate the year-round availability of E15 through an emergency waiver and reverse the lowering of the 2020 and 2021 Renewable Volume Obligations.
E15 has been approved for sale since 2010-2011, but regulatory roadblocks have slowed E15’s introduction into the market, particularly during the summer ozone control season—May 1 through September 15.
Corn growers say the Biden administration has several tools to use, including acting under Section 211 of the Clean Air Act, having the EPA use its enforcement discretion or issuing an executive order.
Renewable fuel and feedstock producers suggest three possible means through which the administration could eliminate these barriers and authorize the year-round sale of E15.
First, the U.S. Environmental Protection Agency could exercise its waiver authority pursuant to Section 211(c)(4)(C)(ii) of the Clean Air Act to waive the 9-psi RVP limit for ethanol-gasoline blends during the summer ozone control season.
This action is expressly authorized by the statute and actually would result in lower overall tailpipe emissions. Moreover, EPA’s March 2020 waiver of the federal RVP requirements in response to the fuel supply issues caused by the COVID-19 pandemic establishes a recent precedent for a nationwide waiver, the groups state.
Second, EPA could exercise its enforcement discretion to allow the sale of E15 with an RVP of up to 10-psi during the summer. Enforcement discretion under these circumstances would be appropriate given the substantial energy security concerns implicated by the conflict in Ukraine.
Third, the administration could take action, using its executive order authority, to authorize the sale of E15 pursuant to its broad executive authority triggered by a national emergency.
A potential energy crisis could certainly constitute a national emergency and enabling E15 to be sold year-round would be a straightforward solution to address such a situation.
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