EPA & the Biofuels Back Track
The (mostly corn-based ethanol) biofuel industry is, understandably, quite disappointed in the confirmation of earlier rumors that the renewable fuel mandate would be scaled back in 2014-5. The revised proposal trims roughly 10% from the ‘first generation’ volume, roughly in line with lower US gasoline consumption since enactment of the initial program, although absolute ethanol volumes (mandated) will be roughly flat with 2013.
So biofuel/environmental advocates are blaming the EPA for caving to the oil companies, while others note the unintended consequences of higher corn prices (meat, baked goods inflation), weak commercial/economic progress on advanced biofuel programs, and the difficulty of implementing improved distribution of higher content fuels (read E15).
My view is, simply, that first generation ethanol was not really intended or in actuality an environmental product – the GHG benefits have proven to be highly debatable and, on a well to wheels basis, ethanol (currently $2.15-ish/gallon for 2/3 the mileage) is more expensive than gasoline at $2.65 (wholesale). The “plan” was that allowing corn based ethanol would further encourage the development of advanced (non food based) additives – largely from cellulosic feedstock. That didn’t happen. The EPA has been backtracking on cellulosic volume requirements since Day 1.
While we’re at it – today’s ethanol producers appear to be making greater profit/gallon than the refiners! On an arguably inferior product!
In addition, as ObamaCare Version 1.0 might have shown, changing formulation, distribution, automotive concerns, and consumer acceptance, requires more than legislating it so. More reasonable might have been the level playing field for ALL transportation products – as lobbied by non-corn states – set emissions specs and let the industry meet them, whether sugar, corn, or hydrocarbon based (hello, Celanese TCX!) ethanol, or other ingredients (MMT? MBTE?).
If the environmental footprint was significantly better, OR the product delivered greater value, OR it was a gateway to much better offerings, greater emphasis (and effort) to develop an ethanol transport economy might have made sense. But it didn’t.