FocusEthanol, beef groups debate US biofuels mandate

12 September 2013 22:47  [Source: ICIS news]

HOUSTON (ICIS)--An ethanol trade group is standing by its claim that the US Renewable Fuel Standard (RFS) is working, but a cattlemen’s organisation is saying that the federal volume mandate puts the beef industry on an unlevel playing field for the finite amount of corn that is produced.

Renewable Fuels Association (RFA) president Bob Dinneen and National Cattlemen’s Beef Association (NCBA) executive director of legislative affairs Kristina Butts debated on Thursday the RFS and how the mandate affects their industries.

The RFS was created by the Energy Policy Act of 2005 to establish a US fuel volume mandate to boost ethanol, biodiesel and other renewable resources. In August, the Environmental Protection Agency (EPA) finalised the 2013 annual percentage standards, adding that it may waive or reduce volumes for the 2014 requirement.

Dinneen said the RFS has decreased US dependence on foreign oil while creating jobs and revitalising rural communities.

“Everybody has profited from a rising tide,” he said. “Cow and calf production has been up and profitability has been up over the last eight years that the RFS has been in place, and we don’t think that’s a surprise at all.”

One area that benefits the agricultural sector is the production of distiller grains as coproducts, Dinneen said. Distillers grain is livestock feed that is typically 80-90% of the price of grain but has 110-130% of the feed value, he said.

Butts said the beef industry has acknowledged that it uses distiller grains, but availability varies across different regions, which causes concerns about consistency because the nutritional value is not as high in dried distiller grains (DDGs) as the wet version.

Additionally, a discussion that is often left out is the export of DDGs, she said, citing a University of Nebraska study that said only 7% of those DDGs is going to the beef industry.

Butts argued that the cattlemen’s group is not opposed to renewable fuels but that it is against the arbitrary mandate of their use.

When asked why there needs to be an ethanol mandate at all, Dinneen said the US needs to have a programme in place that would ensure that consumers have options – particularly one that offers them a cheaper product.

“The fact of the matter is there is no free market in energy in any place in the world,” he said. “We are competing against people that have to buy our product and take our product to the market place."

Butts argued that officials from both the EPA and the US Department of Energy (DOE) have said that the ethanol market is picking up, regardless of the mandate, because of the octane levels that are achieved and because of the less expensive prices.

“Ethanol industry is a mature industry, and we would like to see it stand on its own,” she said, adding that the agricultural industry is just trying to level the playing field and find options that could serve as long-term considerations and changes to that mandate.

The waiver process does not consider natural disasters and other impacts, she said. This year’s drought was one of the worst in history, and the industry is seeing “an exodus of producers” leaving.

“We think that the waiver process needs to be fixed,” she said. “We think when government policy is mandating one use of corn over the other that it’s not the true market dictating the price per bushel.”

Dinneen argued that the extended drought and not having ready access to distiller grains are reasons that are causing cattle producers to leave the industry, not ethanol production.

“The fact is whether obligated parties are going to be able to meet the requirements,” he said. “Clearly, there was no need to waive the requirement,” he said. “If there was going to be a shortage of physical ethanol or they weren’t able to meet their requirements, different story. As it is the waiver is not granted is indicative of the process working.”

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By: Tracy Dang
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