Reduced biofuel demand and a battle for markets share are the results of the Obama Administration’s decision to lower the amount of ethanol U.S. refiners must blend into gasoline, said Bob Dinneen, president of the Renewable Fuels Association (RFA) at the group’s annual State of the Ethanol Industry event on Feb. 16.
The Environmental Protection Agency in November said blenders and refiners must use 14.5 billion gallons of ethanol this year, less than the 15-billion-gallon target in a 2007 energy law. That volume requirement is stifling growth and pitting renewable fuels like ethanol and biodiesel against each other, according to Dinneen.
“EPA’s revisionist RFS policy would result in biofuels cannibalizing biofuels, fighting for a stagnant market,” Dinneen said. In the meantime, ethanol needs to find new pockets of growth, he said.
The US has capacity to produce about 16 billion gallons of ethanol annually, according to the RFA. That’s about 1.5 billion more than what the government now requires.
Producers will look to expand exports and promote ethanol’s benefits as an octane enhancer to regulators and car manufacturers, Dinneen said. Ethanol use stands to gain if minimum octane standards are raised.
Dinneen also said that the domestic ethanol industry remains strong and touted its ability to successfully navigate the vagaries of the markets and overcome the perils of policy uncertainty.
The strength of the U.S. ethanol industry is seen in its record production – 14.7 billion gallons, its record blending demand – 13.75 billion gallons, record feed production – 40 million metric tons, and record greenhouse gas reductions – 41.2 metric tons,” said Dinneen. “Those aren’t the stats of an industry in retreat, that’s an industry confident, defiant, and prepared to weather any storm.”
Dinneen called the U.S. ethanol industry the “cornerstone” of the rural economy, noting that it added $44 billion to the nation’s Gross Domestic Product and paid $10 billion in taxes last year. He drew a sharp contrast with what he characterized as the “boom and bust cycles” of oil extraction which, he said, can wreak havoc on economically vulnerable communities.